Boeing CEO Says Sim Training Drove New Forecast

Date : 01/22/2020 @ 7:20PM
Source : Dow Jones News
Stock : Boeing Co (BA)
Quote : 287.76  -17.83 (-5.83%) @ 1:00AM
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Boeing CEO Says Sim Training Drove New Forecast

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By Doug Cameron and Andrew Tangel 

Boeing Co. Chief Executive David Calhoun on Wednesday said the driver for the new forecast for securing regulatory approval and returning the 737 MAX to service was the decision to recommend simulator training for pilots.

The company's surprise reversal of its prior position that computer-based training would be sufficient places additional strain and costs on airlines looking to resume flying.

Boeing said Tuesday that it didn't expect regulators to approve the return of the MAX to commercial service until mid-year, at least three months longer than most analysts expected.

Mr. Calhoun said airline pilots were key to restoring consumer confidence in the plane, which has been grounded since last March following two fatal crashes.

He said the new forecast reflected "new ground rules" and a departure from prior practice that included best-case scenarios. "It doesn't have a sharp deadline attached to it," he told reporters, a week ahead of the release of earnings that are likely to show the aerospace giant nursing a full-year loss for 2019.

Boeing has already set aside more than $9 billion to cover customer compensation and higher costs to produce a backlog of 4,500 MAX jets, and analysts expect this figure to climb to $16 billion or more.

The latest delay is sending ripple effects through Boeing, its suppliers and customers. MAX production is being suspended, forcing suppliers to consider job cuts, while most airlines have already removed the plane from schedules through June. United Airlines Holdings Inc. said Wednesday it didn't plan to fly the plane this summer.

Mr. Calhoun said MAX production would likely resume "months" before the plane was cleared by regulators.

Boeing shares hit a new 52-week low ahead of his media call. The stock was recently down 1.5% at $308.65.

Mr. Calhoun became CEO on Jan. 13 following last month's ouster of Dennis Muilenburg.

Write to Doug Cameron at doug.cameron@wsj.com and Andrew Tangel at Andrew.Tangel@wsj.com

 

(END) Dow Jones Newswires

January 22, 2020 14:05 ET (19:05 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.

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