Boeing to take a $4.9 billion charge over grounded jet

DALLAS (AP) — Boeing said it will take a $4.9 billion charge to cover possible compensation to airlines whose Max jets remain grounded after two deadly accidents.

Boeing said Thursday the calculation was based on an assumption regulatory approval for the plane’s return to flying will begin early in the fourth quarter.

That timing is earlier than some analysts expect and may have contributed to a rally in Boeing shares in after-hours trading.

Boeing said the after-tax charge will cause a $5.6 billion reduction in revenue and pre-tax earnings for the April-through-June quarter. Boeing is scheduled to report financial results next week.

Airlines around the world have canceled thousands of flights since March, when regulators grounded the Boeing 737 Max and the company suspended deliveries of new jets.

Boeing is also raising its estimate of Max production costs by $1.7 billion because production will be reduced longer than expected. Boeing is still working on fixing flight-control software that appeared to play a role in crashes that killed 346 people off the coast of Indonesia and in Ethiopia.

The plane’s return has been pushed back several times, most recently after Federal Aviation Administration pilots found a new flaw while testing Boeing software changes in a flight simulator.

That discovery prompted Boeing to say in late June it expected to present its proposed fix to the FAA “in the September timeframe.” It would likely take several more weeks for the FAA and other regulators to approve Boeing’s work, give pilots additional training and bring long-parked jets up to flying condition.