Boeing will report nearly $3 billion in pre-tax charges in its second quarter financial results scheduled to be released on 27 July.
The forward-losses include new charges on three aircraft development programmes — the 787, 747-8 and KC-46 — that have plagued the company’s balance sheets since the end of 2007, the company announced on 21 July.
Boeing Commercial Airplanes will record a pre-tax charge of $2.78 billion in the second quarter results. Boeing Defense, Space and Security also will report a $221 million pre-tax charge. Total after-tax charges during the quarter will amount to $2.1 billion.
The largest portion of the forward losses come from Boeing’s decision to retire two unsold 787-8s rather than spend even more money to refurbish the former flight test aircraft into a condition a buyer would accept. Boeing will report an $847 million charge on an after-tax basis.
Delays and production break-downs during the development phase of the 787 programme has cost Boeing dearly. The programme carried $32.4 billion in deferred production and unamortised tooling costs at the end of the first quarter, which must be amortised over the next roughly 850 aircraft deliveries for Boeing to break-even on the programme.
Despite finalising terms of an AirBridgeCargo plan to acquire 20 aircraft last week, Boeing acknowledged a bleak sales outlook for the 747-8 programme with an after-tax charge of $814 million. Last April, Boeing reported the 747 programme carried $876 million in deferred production costs.
Finally, fixing an axial load problem on the KC-46 refueling boom forced the company to recognise an after-tax charge of $393 million.
The charges are “prudent actions that reflect market realities, reduce future financial risk and ultimately drive value to our shareholders,” says Boeing chief financial officer and executive vice-president of corporate development and strategy Greg Smith.
Boeing had already recorded a total of $1.33 billion in after-tax charges combined on the 747 and KC-46 programmes since the second quarter of last year.
Boeing re-affirmed annual revenue and cash predictions, but plans to update guidance on earnings per share on 27 July.
“These are the right, proactive decisions to strengthen our business going forward," says Boeing chairman, president and CEO Dennis Muilenburg.
Source: Cirium Dashboard
