Boeing expects a $5.6 billion hit for 737 Max disruptions

Southwest cancels Boeing 737 Max flights until early November

The Max was grounded after crashes in Indonesia and Ethiopia killed 346 people.

"This is a defining moment for Boeing".

Boeing also said it assumes the 737 MAX return to service in the United States and other countries will begin early in the fourth quarter, though the company cautioned the exact timeline could shift as it has in recent weeks.

"The MAX grounding presents significant challenges for our customers, company and supply chain", he tweeted. "This assumption reflects the company's best estimate at this time, but actual timing of return to service could differ from this estimate", it added.

More than 500 of the aircraft are stored around the globe, including about 150 newly built models that Boeing can't send to airlines while Max flights are halted. There is no date set for returning these planes to service but Boeing did previously expect to receive a new certificate of airworthiness from the U.S. Federal Aviation Administration (FAA) by the end of the year. The company said it will discuss the financial impact of the 737 Max grounding on a conference call with analysts that day.

The massive hit to Boeing's earnings will result in the company's first quarterly loss in 10 years.

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Boeing announced in early July that it has set aside 100 million dollars to support education, hardship and living expenses of the families of those who were killed in the "tragic accidents" of Indonesian Lion Air Flight 610 and Ethiopian Airlines Flight 302 in October 2018 and in March this year, respectively.

The new costs, which Boeing is announcing the week before it reports earnings, do not include the potential costs of litigation associated with the Max, or the $100 million fund it recently announced for families and communities affected by the two crashes.

But those donations have not silenced critics of the company, including from Paul Njoroge who castigated the company as greedy and reckless before a congressional panel on Wednesday.

While Boeing hones flight-computer software fixes and works to convince aviation authorities that its single-aisle workhorse jet is safe, teams of workers are tackling production and delivery issues.

In a statement this week, Boeing said the sum will relate to concessions and reimbursements granted to customers for disruptions caused by the fleet being grounded, and delivery delays. It was the second deadly crash involving that type of plane in months.

Pilots have said they were not adequately trained on the MCAS system and that it was not disclosed to them. Shares had fallen 2.3 per cent during the trading session. Boeing's shares have taken a hit from the entire MAX fiasco while airlines in the US and overseas, Southwest especially, have suffered a loss of capacity due to the grounding.

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