Financially, Boeing continues to pay high wages to ensure the safety of 737 Max passengers in the future.
Boeing details direct costs from the base of about $ 20 billion: $ 8.6 billion in compensation for customers with flight plans, $ 5 billion for defective production costs, and $ 6.3 billion for increased costs of the 737 Max project.
The company also spent nearly $ 600 million on aircraft maintenance, test training and software upgrades that were not included in the company’s cost estimates. It has also set up a $ 100 million victim compensation fund, which is not yet included in Boeing’s estimated $ 20 billion.
So the cost of landing land released by Boeing includes $ 20.7 billion.
Only about half will be delivered in the fall, and some shipments will last until 2023. Boeing does not receive most of its sales until the aircraft is delivered to the airline, so interest is likely to rise – perhaps Chris Denicolo, an aviation credit analyst with Standard & Poor’s, said $ 3 billion.
What is clear is that the $ 20.7 billion cost that Boeing details is just the beginning. Bank of America put the cost at more than $ 25 billion.
“It will be worth more than $ 20 billion. But it is difficult to say how much it will cost,” Denicolo said.
Loss of sales
Due to the groundbreaking, Boeing lost the cancellation fee listed on the sales contract for the 737 Max. As the Covid-19 virus has sent down air demand, airlines have begun to take advantage of the free cancellation policy, anticipating that they will not need aircraft for many years.
The 737 Max typically sells for about $ 55 million, or half the stated price, so the worst-case scenario for a Boeing is that it could lose as much as $ 67 billion in revenue from a drop in sales.
But experts say it is likely that Boeing will eventually sell those planes, albeit at a reduced price, in some cases to the same customers who are now canceling orders.
S&P’s Denicolo and other industry experts agree that the high price cuts, which may not have been fundamental, are a real financial risk for Boeing.
“Say you are an airline. If there are no more penalties, why not cancel my order altogether, and can I repurchase it cheaper?” Industry experts, who spoke on condition of anonymity.
Boeing will not comment on the price paid for its aircraft or any discounts. But experts say that could be as much as $ 20 million per aircraft, or about $ 25 billion in total – more than double the actual cost of landing.
The multiple price reductions of the other 3,300 orders still in the book could increase the overall cost of the Boeing aircraft, perhaps as much as the $ 68 billion Deepwater Horizon.