Yesterday was a very bad day for aircraft manufacturer Boeing.
According to the company, first quarter sales in 2019 declined 2 percent compared to the first quarter of 2018, and earnings were down 18 percent during the same period.
The problem? A sharp decline in deliveries of Boeing commercial (non-military) aircraft in the wake of the 737 MAX crashes in Indonesia and Ethiopia. While Boeing delivered 184 commercial airplanes in the first quarter of 2018, the company delivered only 149 in the first quarter of 2019. This drop was in great part the result of Boeing's suspension of 737 MAX deliveries in March.
According to Greg Smith, Boeing's CFO, the grounding of the 737 MAX cost the company $1 billion in the first quarter of 2019.
Of course, as the FAA's grounding of the 737 MAX aircraft--the company's best-selling plane--drags on with no fix in sight, costs may increase even further. And this doesn't count the likely financial hit from lawsuits filed by families of crash victims, and potential claims by airlines that have had to keep their planes on the ground for more than a month now. Southwest Airlines has 34 Boeing 737 MAX airplanes. American has 24 and United 14.
In a statement, Boeing CEO Dennis Muilenburg said,
Across the company, we are focused on safety, returning the 737 MAX to service and earning and re-earning the trust and confidence of customers, regulators and the flying public. As we work through this challenging time for our customers, stakeholders and the company, our attention remains on driving excellence in quality and performance and running a healthy sustained growth business built on strong, long-term fundamentals.
Lion Air Flight 610--a Boeing 737 MAX 8 aircraft--crashed on October 29, 2018, shortly after takeoff from Soekarno-Hatta International Airport in Jakarta. All 189 passengers and crew died in the disaster.
Then, on March 10, 2019, Ethiopian Airlines Flight 302--another Boeing 737 MAX 8 aircraft--crashed soon after takeoff from Addis Ababa Bole International Airport in Ethiopia. All 157 passengers and crew died in this latest disaster involving Boeing 737 MAX aircraft.
After initially resisting calls to ground the Boeing 737 MAX, on March 13, 2019, the FAA did just that. And, a day later, Boeing suspended deliveries of the aircraft while it focused on determining the cause of the crashes and coming up with a fix.
As one analyst suggested, 2019 will be a "lost year" for the fabled aircraft manufacturer. Hopefully Boeing's string of bad luck will be confined to this year and not bleed into the next. Only time will tell.