(MENAFN- Baystreet.ca) Boeing (NYSE: BA) on Thursday said it will take a $4.9-billion after-tax charge in the second quarter due to the worldwide grounding of its 737 Max planes after two fatal crashes.
The charge, which comes to $8.74 a share, is set to wipe out any profit. Analysts expected the company to book a per-share profit of $1.80 for the second quarter
While the entire estimated amount will be recognized as a charge in the second quarter, the company expects any potential concessions or other considerations to be provided over a number of years and take various forms of economic value.
Additionally, Boeing's estimated costs to produce the aircraft in the 737 accounting quantity increased by $1.7 billion in the second quarter, primarily due to higher costs associated with a longer than expected reduction in the production rate.
The increased 737 program costs will reduce the margin of the 737 program in the second quarter and in future quarters.
Boeing continues to work with civil aviation authorities to ensure the 737 MAX's safe return to service, and these authorities will determine the timing of return to service.
For purposes of the second-quarter financial results, the company has assumed that regulatory approval of 737 MAX return to service in the U.S. and other jurisdictions begins early in the fourth quarter 2019. This assumption reflects the company's best estimate at this time, but actual timing of return to service could differ from this estimate.
Shares took flight first thing Friday, gaining $8.21, or 2.3%, to $369.91
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