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Boeing profit falls short in 3Q, replaces executive who oversaw 737 Max

Boeing profit falls short in 3Q, replaces executive who oversaw 737 Max

Wednesday, October 23, 2019

CHICAGO —Boeing is reporting a big profit shortfall for the third quarter after costs related to the troubled 737 Max rose by US$900 million.

The Chicago company said Wednesday that it expects regulatory review to begin in the fourth quarter. A few weeks ago, Boeing Co. predicted the plane would be flying around that time.
Net income was $1.17 billion, or $2.05 per share. Per-share earnings were $1.45 when nonrecurring items are removed, far short of the $2.04 Wall Street was looking for, according to a poll by Zacks Investment Research.

Revenue was $19.98 billion, topping forecasts analyst expectations $19.34 billion.

Boeing also announced that it is replacing the head of its commercial-airplanes division who oversaw the 737 Max.

The company said Tuesday that Kevin McAllister is out as chief executive of Boeing Commercial Airplanes. Boeing did not specify whether he quit or was fired. He is being replaced by Stanley Deal, leader of Boeing’s services division.

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The shake-up in Boeing’s top ranks comes just days after the release of internal communications that showed a senior test pilot experienced serious problems while testing flight-control software for the 737 Max on a simulator.

That software, called MCAS, is at the centre of investigations into two crashes that killed 346 people and led to the grounding of the Max. Boeing is taking much longer than executives expected to change the software and get the plane flying again.

“The Boeing board fully supports these leadership moves,” Chairman David Calhoun said in a prepared statement.

Calhoun himself is new in his position. CEO Dennis Muilenburg also served as company chairman until the board stripped him of that job and elevated Calhoun two weeks ago.

In a statement, Muilenburg thanked McAllister for his service “during a challenging time, and for his commitment to support this transition.”

Boeing took a $5.6 billion pretax charge this summer to cover its estimate for compensating airlines that have cancelled thousands of flights because of grounded planes. It has disclosed nearly $3 billion in other additional costs related to the grounding.

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The company faces dozens of lawsuits by families of passengers killed in the Max crashes in Indonesia and Ethiopia. It is also the subject of investigations by the Justice Department and Congress.

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