Boeing has placed the total cost of the 737 Max crisis at $18.6bn, more than double its previous estimate as it accounts for payments to airlines, reduced profits over the plane’s production cycle and expenses tied to halting manufacturing.
The Chicago manufacturer on Wednesday reported a full-year loss of $636m on $76.6bn in revenue — its first annual loss in more than two decades as it grappled with the fallout from the grounding of its bestselling jet. For the fourth quarter, it recorded $17.9bn in revenue and a loss of $1bn.
Boeing’s projected costs have ballooned since it forecast last year that the grounding of the jet would cost it $9.2bn. Since then it has stopped production and stretched to mid-year its estimate of when federal regulators might clear the Max to return to the skies.
The plane maker now anticipates $8.3bn in payments to airlines for not delivering the jets and $6.3bn in costs over the Max’s entire production cycle, according to an investor presentation on Tuesday. Boeing also expects $4bn in “abnormal production” costs that include payments to suppliers and keeping Max workers on the payroll elsewhere in the company while the factory line in Renton, Washington is shut down.
Boeing has struggled since regulators grounded the Max 10 months ago following two planes crashes within five months that killed a combined 346 people. A flight control system triggered by a single sensor was implicated in the disasters after it repeatedly pushed the noses of the planes downward. Fallout from the crisis led to the ouster of chief executive Dennis Muilenburg, who was replaced by board veteran David Calhoun.