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737 MAX Grounding To Cost Boeing $4.9 Bln

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Boeing expects to record a hefty charge and increased costs in the second quarter, related to the 737 MAX grounding and associated delivery delays. The aircraft maker will report results for the second quarter of fiscal 2019 on June 24.

Boeing sees charges of $4.9 billion or $8.74 per share on the potential concessions and other considerations to customers for disruptions related to the 737 MAX grounding. This will translate to a $5.6 billion reduction of revenue and pre-tax earnings in the second quarter, the company said in a statement.

Further, Boeing said the 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.

In its fiscal 2019 outlook, Boeing had not included impacts related to the 737 MAX grounding as they were unsure on the timing of return to service of the aircraft.

All Boeing 737 MAX aircrafts, including the 8 and 9 variants, were grounded by the Federal Aviation Administration (FAA) from March 13 following crashes in Ethiopia and Indonesia killing 346 people in total.

Boeing has been working with the FAA, Department of Transportation (DOT), National Transportation Safety Board (NTSB), and other regulatory authorities for lifting the grounding and to get the 737 MAXs back in the air.

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