BA Boeing Co

By Doug Cameron and Andrew Tangel 

Boeing Co. reported its first annual loss in more than two decades and said the costs from the 737 MAX crisis have climbed above $19 billion.

The MAX has been grounded world-wide since last March following a pair of plane crashes within five months of each other that killed 346 people. The crashes have raised questions about the plane's design, have hurt the company's relationships with suppliers and customers, and led to the ouster of its chief executive.

Wednesday, Boeing booked another $9.2 billion in charges and associated costs in the fourth quarter to cover potential compensation to MAX customers as well as higher expenses from reducing and then halting production of the jetliner following the crashes.

The Chicago-based company also said it would make another cut in 787 Dreamliner production next year and booked more charges on its military tanker and space-taxi programs, underlining mounting challenges facing new Chief Executive David Calhoun and his team.

Shares of Boeing, down 4% over the past month, rose more than 2% to $320.56 in pre-open trade.

The pool of customer compensation was increased by $2.6 billion in the latest quarter to take the expected bill to $8.8 billion for 2019. Higher production costs for the MAX added another $6.2 billion.

Boeing has closed MAX production, but expects to restart before securing regulatory approval for the plane to re-enter service. It will take about two months to spool up production at its idled plant near Seattle, according to a person familiar with the company's plans.

The company hasn't cut any staff, though some suppliers have laid off workers.

The company's latest financial report comes just days after Mr. Calhoun took over as CEO on Jan. 13. Last week, he signaled a back-to-basics approach early in his tenure, saying he would focus on rebuilding trust, boosting transparency and shoring up engineering and safety.

"We're going to do a little less visioning and a little less long-term planning," he said.

Mr. Calhoun said last week that he was confident the MAX will re-enter service, but the biggest crisis in the company's 103-year history has derailed its product strategy -- losing share to rival Airbus SE -- and strained its balance sheet.

Boeing burned through $2.2 billion in cash during the quarter but ended the year with $10 billion in liquidity. It is raising more funding, and debt increased to $27.3 billion at the end of the year.

Its cash profile will be dented further by plans to cut 787 Dreamliner production to 12 from 14 later this year and then again to 10 early next year before returning to 12 in 2023.

The move reflects the failure of expected orders from China to emerge, even with the recent U.S. trade agreement flagged as including aircraft deals. Boeing hasn't secured a new order from China since the fall of 2017.

Boeing also booked a second charge on its CST-100 Starliner space capsule following the failure of last month's debut mission to reach its planned orbit. The $410 million charge reflects the likelihood Boeing will have to make a second uncrewed launch before it can secure approval to fly with astronauts. It took a $162 million charge on the program in 2016.

The full-year loss compared with a profit of $10.46 billion in 2018, with a per-share loss of $3.47 following a $16.01 profit in 2018. The fourth-quarter per-share loss of $2.33 follows a year-earlier $5.48 profit.

Boeing has suspended its big stock buyback program to conserve cash and implemented other measures such as an acquisition freeze.

It froze MAX production after building more than 400 jets it has been unable to deliver, alongside the 380-plus grounded by regulators since March.

The final bill could rise, depending on when the MAX is able to re-enter service. Most carriers have removed the plane from schedules through June. Some, such as United Airlines Holdings Inc., have said they don't expect to fly it this summer.

Its new 777X jet, which flew for the first time last weekend, is also behind schedule and deliveries aren't due to start until next year, potentially forcing a cut in output of the existing 777 model.

Boeing's defense unit is also under pressure after design issues delayed its KC-46A refueling tanker and quality problems led the U.S. Air Force to withhold some payments.

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

(END) Dow Jones Newswires

January 29, 2020 09:18 ET (14:18 GMT)

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