Boeing’s troubled jet will cost $1 billion to fix

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The $1 billion estimate was disclosed on Wednesday in a presentation for investors as Boeing released first quarter financial results, which missed Wall Street expectations largely due to stopping deliveries of the 737 MAX jets and a slowdown in production.

Sales in its defense sector, for example, rose 2 percent due to higher orders of satellites, weapons and surveillance aircraft, while servicing revenue grew 17 percent to $4.6 billion.

Boeing said it would issue a new financial forecast when it has more clarity around the issues surrounding the 737 MAX.

The souring picture for Boeing's business shows how quickly the company's fortunes have reversed since two deadly crashes of the 737 jet in Indonesia and Ethiopia killed a combined 346 people.

Boeing said it is "making steady progress" on a fix to the jet's anti-stall system that is thought to be a factor in both accidents.

"Across the company, we are focused on safety, returning the 737 MAX to service, and earning and re-earning the trust and confidence of customers, regulators and the flying public", said Boeing chairman, president and CEO Dennis Muilenburg.

Abandoning its full-year financial forecasts as a outcome of the disruption, Boeing said the guidance "does not reflect the 737 Max impacts ... due to the timing and conditions surrounding the return to service of the 737 Max fleet".

Boeing said the US$1-billion in costs tied to the 737 Max problems were mainly a result of less production, labour expenses and fixed costs.

Bank of America Merrill Lynch this month downgraded Boeing shares and slashed its profit forecast for the next four years, citing a "reputational loss" treats to long-term market share.

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Boeing is temporarily cutting production of the 737 airliner from 52 planes a month to 42 from mid-April.

The crashes caused regulators worldwide to ground the 737 MAX and triggered investigations into the aircraft's development by federal transportation authorities and the US Department of Justice.

Boeing plans to discuss the results with analysts on a conference call Wednesday morning.

Given Boeing's size, the financial hit to the company has been "modest so far", S&P Global Ratings said, but warned that the cash drain will continue until the company can resume deliveries.

The production dip alone has cost it $1 billion so far, the company said, because the lower rate means the planemaker has to pay more for parts, which are priced according to the volume Boeing buys.

"We also know there are areas where we can improve", he added, explaining why Boeing is now upgrading MCAS with changes that will limit the software's ability to automatically force the plane's nose down powerfully in some circumstances. Boeing reported adjusted earnings per share of US$3.16, nine cents less than the average of analysts' estimates compiled by Bloomberg. "We've taken the time to understand that".

Shares in Boeing have almost tripled in value during the past three years, the most rapid rise in the company's history and growth close to four times as fast as the Dow Jones industrial average during that period.

Boeing's core operating earnings in the first three months of the year were 21% lower at nearly $2bn, reflecting a one-third drop in deliveries of the Max 8.

The company repurchased $2.3 billion of its shares in the latest quarter, all of which occurred prior to mid-March.