Boeing Co. will set aside about $5 billion to compensate airlines that have suffered because of the prolonged grounding of the 737 MAX plane.
Chicago-based Boeing also faces litigation seeking compensation for families of the 346 people who died in two crashes, as well as higher costs after curtailing production of the MAX following its grounding by global regulators in March.
The costs and the potential timing of the MAX’s return to commercial service will be a key focus of investors when Boeing releases earnings for the second quarter next week.
Shares in Boeing rose 2% after hours on Thursday from their close at $361.11, erasing a 2% decline during regular trading.
Boeing said the $4.9 billion after-tax charge in the June quarter was related to estimates for “potential concessions and other considerations to customers for disruptions.”
It said the charge, which takes into account taxes, would result in a $5.6 billion reduction in revenue and earnings for the quarter.
The company is expected to report sales of about $20 billion for the second quarter and about $94 billion for 2019, according to the consensus among analysts polled by FactSet.
They had been projecting a quarterly profit of $1.2 billion, meaning the charge likely will result in a deep loss for the period.
Boeing also said it expects to award the concessions to airlines over a number of years.
Airlines likely will be compensated in cash and a mix of other concessions including delivery timing, discounts, and added features and services, a person familiar with Boeing’s plans said.