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Boeing should indicate the number of aircraft delivered during the quarter. The company did not deliver any of its best-selling 737 Max aircraft in the last two weeks of the quarter, as it closed these shipments after the 737 Max aircraft crashed worldwide on March 13th.
Investors will wait to see if Boeing anticipates the costs of grounding and stopping shipments. Boeing (BA) does not normally give dollar figures in its delivery report, but this is not a normal time. It is one of the biggest crises in the history of the company.
Boeing is expected to report its first quarter results on April 24 and then meet with shareholders on April 29. But Tuesday's report provides a quick overview of the financial costs of its 737 problem.
The company could also provide details on ground strikes, although the first quarter report is usually focused on deliveries only, not on orders. To date, only one airline, the Indonesian airline Garuda, has announced that it has canceled an order for 50 jet planes. Although this order represents $ 4.9 billion, this is only a fraction of the backlog of 5,000 737 Max orders recorded by Boeing.
The 737 problem will go well beyond the first quarter results.
Boeing is rushing to propose a hotfix for the automatic security system, which is under investigation for two fatal accidents. Boeing also announced last week its intention to reduce production of the 737 Max.
"The 737 deadline could last longer than expected," Bank of America analyst Ronald Epstein wrote on Monday in a note to investors, in which he downgraded his recommendation on the title.
Epstein estimates that the disruption of Boeing's business could last between six and nine months. He had already planned three to six months of disturbances. He added that he predicts that it will take Boeing until 2021 to catch up on promised aircraft deliveries.
That's a big problem: the 737, which is Boeing's most profitable program, accounts for about 40% of the company's operating profit. Although there are many traditional 737 models in service, almost all new aircraft sold by Boeing as part of this program are Max models.
During the weekend American Airlines (AAL), which has 24 planes Max, announced that it was canceling flights until June because of the grounding. Cai von Rumohr, an aerospace analyst at Cowen, now estimates that Boeing will not be able to make deliveries to American airlines – American, Southwest Airlines (LUV) and United Airlines (UAL) – until June.
And he added that foreign aviation regulators, faster than the US federal aviation authorities to land the aircraft, might take longer to allow these deliveries to resume. . It provides that foreign carriers will not begin to receive aircraft until the third or fourth quarter.
Overall, he expects Boeing to deliver only 500 737 aircraft by 2019. Before the crisis, he thought Boeing would deliver 630. But he admits his best guess might be different if Boeing's problems worsened.
"This results in a considerable financial penalty, albeit difficult to quantify, to the results of 2019," wrote von Rumohr.
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