The 737 Max crisis has already cost Boeing $1 billion - and the company said it can't predict how much worse it might get

Associated Press

Rescuers work at the scene of an Ethiopian Airlines flight crash in March.

• Boeing has lost $1 billion already over the ongoing crisis with its 737 Max aircraft.
• The company said in its first earnings report since the plane was grounded after two fatal crashes that it couldn't predict how much the crisis would affect its profits for the rest of the year.
• Boeing has reported no new orders for the aircraft and has cut production since it was grounded, but has vowed to make the plane "one of the safest airplanes ever to fly" when it is certified to fly again.
• Visit Business Insider's homepage for more stories.

Boeing's ongoing crisis with its 737 Max planes has already cost it $1 billion this year - and the company said it can't predict how much worse the financial impacts of the scandal could be.

Boeing announced on Wednesday that the aftermath of two fatal plane crashes, which has seen its 737 Max planes grounded around the world and a dip in production of the planes, had already cost it $1 billion, according to a report from Reuters.

The $1 billion in costs relates to an increase in the amount Boeing is paying for parts for the 737 Max, Reuters said. As it is producing lower numbers of the plane since the crashes, parts cost more as deals with suppliers are "priced according to the volume Boeing buys," Reuters said.

Boeing said that its core profits fell 21% in the first three months of 2019 compared with the same period in 2018, and said that it was withdrawing its 2019 financial forecast because of increased uncertainty about the plane.

"Due to the uncertainty of the timing and conditions surrounding return to service of the 737 MAX fleet, new guidance will be issued at a future date," Boeing said.

Read more: Boeing can't deliver the 737 Max to customers, and now the planes are clogging up its storage lots

Wednesday's earnings were the first released by Boeing since the aircraft were grounded around the world in response to the fatal Ethiopian Airlines crash in March, which followed a fatal Lion Air crash in October. Nearly 350 people were killed in the two crashes.

According to Bloomberg, the plane was set to become Boeing's largest source of both revenue and profit in 2019.

REUTERS/Stringer

Rescue workers with a part of the plane's wreckage that shows Lion Air's logo.

Boeing has reported no new orders for the aircraft since it was grounded, and has cut production of the 737 Max from 52 to 42 aircraft a month. Airlines have cancelled flights into the summer as a result.

The preliminary reports into both crashes identified issues with the planes' MCAS automated anti-stall system, which Boeing is currently working on a fix for. The planes will remain grounded until the US Federal Aviation Administration approves the software fix.

Reuters/Larry Downing

Boeing CEO Dennis Muilenberg.

But Boeing CEO Dennis Muilenberg defended the processes behind the aircraft on an earnings call on Wednesday, Quartz reported, saying: "There is no technical slip or gap here."

Read more: Boeing's CEO should be removed as chairman of the company's board amid its 737 Max crisis, a major shareholder advisor says

He said that "both accidents were a series of events, and that is very common to all accidents that we've seen in history," and that these included "erroneous" sensor information from "multiple causes" that activated the MCAS system.

But he alluded to the idea of pilot error, saying that the two fatal crashes both had "actions or actions not taken that contributed to the final outcome."

Muilenburg also said on Wednesday that he expects a certification flight to take place with the FAA in the "near term," Reuters reported.

Reuters

A Boeing 737 Max under construction in March.

He said that the 737 Max "will be one of the safest airplanes ever to fly" when it returns to the sky.

Read more: Boeing's 737 Max 8 nightmare and troublesome politics threaten the US's standing as the global aviation leader

In a statement on Wednesday, Muilenburg said that the company is "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."

In addition to slowed production, Boeing is also facing lawsuits from shareholders and from victims' families, reports of issues with its factory processes, and calls for it to appoint an independent board chairman.

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