Air Capital Insider

Boeing to take $2.1 billion earnings hit in second quarter

Boeing said after the markets closed Thursday that it would take a $2.1 billion hit in after-tax earnings in the second quarter of 2016 because of charges to its 787 and 747 airliner programs, and the KC-46A air refueling tanker program.

The charges to the 787 come from a decision to not refurbish and sell two 787s used in its flight test program.

The company said it also anticipates continued weakness in the air cargo market and will hold production of its 747-8 Freighter at a rate of about one airplane every two months. Boeing won’t increase production to one a month beginning in 2019 as it had previously planned.

It will also take a hit on its tanker program for the Air Force. Boeing said tanker chargers include higher costs from changes to the program schedule, technical challenges such as a refueling boom axial load issue found during flight testing, and certification delays.

Boeing chief financial officer Greg Smith described the decisions in a news release Thursday as “prudent actions that reflect market realities, reduce future financial risk and ultimately drive value to our shareholders.”

Boeing is scheduled to release its second-quarter earnings on July 27.

Spirit AeroSystems in Wichita makes parts of all Boeing commercial airplanes.

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