Skip to Content

Boeing Plans Big Accounting Charge

BRITAIN-AVIATION-SHOW-AEROSPACE-MANUFACTURINGBRITAIN-AVIATION-SHOW-AEROSPACE-MANUFACTURING
Boeing 787 Dreamliner takes part in a flying display at the Farnborough Airshow, south west of London, on July 12, 2016. Adrian Dennis — AFP/Getty Images

(Reuters) – Boeing said on Thursday it will take more than $2 billion in accounting charges related to the 787, 747 and KC-46 tanker aircraft program when it reports second-quarter results on Wednesday.

The 787 charge totals $847 million after tax, or $1.33 a share, and stems from two test aircraft that Boeing said were substantially modified and remain unsold.

The 747 charge totals $814 million after tax, or $1.28 a share, and reflects anticipated weak demand for air cargo shipments. Boeing had cut production of its 747-8 aircraft to six a year due to the weak market and expected the market would improve by 2019, allowing it to lift output to 12 a year.

The KC-46 tanker charge of $393 million after tax, or 62 cents a share, is for issues with the delivery schedule and hardware issues that the company had already announced. The company said this did not include any compensation for the U.S. Air Force, which Boeing said would be announced in the second-quarter results.

For more about Boeing, watch:

“These are the right, proactive decisions to strengthen our business going forward,” CEO Dennis Muilenburg said in a statement.

The Chicago-based aerospace and defense company last week celebrated the 100th anniversary of its founding in Seattle.