Boeing: MAX Costs To Exceed $18 Billion


Boeing lost money for the first time since 1997 in the wake of the 737 MAX crisis, the company reported today. Against a profit of $10.5 billion in 2018, Boeing says that it lost $636 million in 2019 as it looked for outside funding to help it weather the storm. Earlier this week, the company sought and received more than $12 billion in financing commitments; earlier, it had signaled that it was looking for $10 billion in assistance. All told, Boeing reported a loss of $2.33 per share on revenues that had fallen 37 percent from the previous year.

The $18 billion loss from the MAX grounding and production stop is more than double what Boeing had predicted just three months ago, with some of that coming from a protracted recertification period and some from the costs it will incur restarting the MAX production line, an estimated $4 billion. (And that does not take into account the hardships faced by the myriad companies in Boeing’s supply chain.) Some $2.6 billion, in the last quarter alone, of the $18 billion write-down goes to compensating customers for the downstream effects of the grounding. The current thinking is that the jet will be restored to service sometime midyear. 

Boeing delivered just 380 aircraft in 2019, down from 806 last year and a stark contrast to the expectation that it would produce nearly 900 in 2019. At the same time, Airbus clearly benefited from Boeing’s troubles, delivering a record 863 aircraft last year.

Boeing stock rebounded slightly on the quarterly report after suffering its deepest decline since the MAX grounding last March earlier this month. After a high of $440 a share on March 1, 2019, the planemaker’s stock had fallen to just $309/share on Jan. 22 of this year. It’s worth remembering that Boeing still has $463 billion in the order book for more than 5,400 non-military aircraft, the bulk of which are 737 MAX aircraft. 

In the midst of the U.S. Air Force being unhappy with the KC-46 tanker, Boeing also said it would cut production rates on the 787 Dreamliner from 14 to 10 aircraft per month starting in 2021. Some good news for the company came last week when the much-delayed 777X finally flew. That flight-test program continues through a soggy Seattle winter, with Boeing nearly a year behind on the program. The company originally planned to have the 777X ready for 2021 but questions remain about how much scrutiny the FAA and other aviation regulators will give the program. The 777X has new engines, a new composite wing with foldable wingtips and a heavily revised fuselage with a stretch. 

Avatar photo
KITPLANES Editor in Chief Marc Cook has been in aviation journalism for more than 30 years. He is a 4000-hour instrument-rated, multi-engine pilot with experience in nearly 150 types. He’s completed two kit aircraft, an Aero Designs Pulsar XP and a Glasair Sportsman 2+2, and currently flies a 2002 GlaStar.

Other AVwebflash Articles


  1. Boeing is reaping what it has sown. Unfortunately, workers, suppliers, investors, airlines and contractors are paying the price. All the while the truly guilty get golden retirements worth many millions, other culpable bean counters get big bonuses and are told to shut up and forget everything. This mess has been going on for a long time at Boeing.

    How sad it took the inexcusable deaths of almost 400 people for it to come to roost.

    • Actually Klaus, they probably don’t have insurance for much of the costs. They would have coverage for the plane crash victims and litigation costs, except for punitive damages. As far as the costs for recertification and reimbursing the airlines for their business losses, there may be some coverage under a product recall type policy, but likely no more than a billion dollars. And, that type of insurance has no bearing on the hull or liability premiums you pay on your plane. Premiums for light planes have been going up recently, but that is due to the historically low premiums we have enjoyed for the past decade, not from Boeing’s mess. The bulk of the $18 billion, (and that may be a low estimate) will be absorbed by stockholders, which is why I predict a stormy annual meeting.

  2. Shareholders in Boeing need to act now and replace most if not the entire board of directors. The BOD hires the officers and set long term strategy for the company. Firing the CEO and replacing him with a board member will do absolutely nothing. And $18B is just the tip of the ice berg. That $18B could have been spent to develop at least 2 clean sheet products which now will be delayed by years. And add in the incalculable cost to the companies reputation.

  3. The suggested fixes to the MAX proposed by Boeing, mainly software changes and an extra AOA probe, seem like they’re going for the cheapest fix. They should have an MCAS fault monitoring system, like the cabin pressure controller has, that has an autofail mode that will disconnect the MCAS system if it detects a fault. And an MCAS disconnect switch in the cockpit that would remove MCAS from operating the trim system. Instead of having to disconnect the entire electric elevator trim system to disable it. It should also include MCAS failure training in simulator courses. And nothing about MCAS should be optional, all needed and optional components should be standard equipment on all MAX’s. But fixes like these cost money and take time, and re-certification of the equipment is required. It looks like they’re resistant to taking such a big step.