Boeing published its costs relating to the MAX and they were more than most people were expecting.
So far the cost of cutting production, delaying further production increases, compensation to airlines, has cost it close to $5 billion. The estimate was that the cost to each shareholders profit would be around $6 per share, but it’s ended up being $8.74.
Boeing let a few carefully worded phrases leak into the lengthy and very wordy press release, which was designed to soften the facts and obfuscate.
One key one was that it would take “several quarters” to deliver the backlog of parked up new aircraft. What that means is 9 months to a year or more, to starting from the point the backlog stops growing, post certification.
What they didn’t say was how these deliveries would be managed. Do they deliver the oldest first and slip the new aircraft out of the factory to the back of the line? Or deliver new units right out of the factory gate and deal with the backlog as a fixed problem to shrink over time?
What was clear is that the loss in revenue this year will be $5.6 billion although the undelivered units will be paid for in the next year.
So having taken a loss in income of $5.6 billion and a post-tax cost of nearly $5 billion the overall deficit in the coming year on just the 737MAX is around $10.6 billion.
For the individual human that’s more money than most people could spend in three lifetimes of profligacy, but in corporate terms it’s a drop in the ocean.
Boeing won’t like it, but it’s nowhere near bringing them down or even slowing them up.
With all their woes one more interesting court case has been launched against Boeing and Southwest Airlines by a class action group. They allege that the pair knew about the MAX issues and that they conspired to cover it up until Boeing got around to fixing it.