Boeing said Thursday the grounding of its 737 Max jets would reduce its revenue and earnings by $5.6 billion in the second quarter, the largest financial impact of two deadly crashes of the jetliner so far.
In a statement, the plane manufacturer said it would record a $4.9 billion charge to compensate airline customers for the delays in getting its 737 Max planes back into service. Boeing’s costs to produce the airplane were also $1.7 billion higher in the second quarter because of changes in production rates, the company said.
The financial toll of the 737 Max grounding is starting to add up for Boeing, which has frozen sales of its flagship jetliner since regulators issued a global grounding of the plane in March. Airlines have canceled thousands of flights late into the fall of this year — incurring losses of hundreds of millions of dollars — while a timeline for the jet’s return remains uncertain.
Boeing said Thursday it is basing its financial projections on the assumption regulators will approve safety fixes to the 737 Max and clear the planes for commercial travel early in the fourth quarter of this year.
Boeing is expected to report second-quarter revenue of $20.4 billion when it reports earnings on July 24. The company said it will discuss the financial impact of the 737 Max grounding on a conference call with analysts that day.
— Douglas MacMillan
Digital currencies such as Facebook’s planned Libra raise serious concerns and must be regulated as tightly as possible to ensure they do not upset the world’s financial system, Group of Seven finance ministers and central bankers said Thursday.
Finance Minister Bruno Le Maire of France, which holds the rotating presidency of the G-7 top world economies, told a news conference the group opposed the idea that companies could have the same privilege as nations in creating means of payment — but without the control and obligations that go with it.
“We cannot accept private companies issuing their own currencies without democratic control,” Le Maire said.
In a summary of the informal G-7 talks in Chantilly, north of Paris, the French presidency said the ministers and governors had agreed that “stablecoins and other various new products being developed, including projects with global and potentially systemic footprint such as Libra, raise serious regulatory and systemic concerns.”
Governments are starting to worry that big tech companies are encroaching on areas that belong to governments, such as issuing currency. Facebook’s June 18 announcement of Libra heralded an effort to expand beyond social networking and move into e-commerce and global payments.
In yet another European Union move against a U.S. tech company, the bloc’s antitrust chief on Thursday fined chipmaker Qualcomm $271 million, accusing it of “predatory pricing” to drive a competitor out of the market.
Margrethe Vestager, the E.U. antitrust commissioner, said Qualcomm was abusing its market dominance in 3G baseband chipsets. She said it sold them below the cost of production to force start-up Icera out of the market almost a decade ago.
Qualcomm is facing antitrust battles on multiple fronts. In the United States, a federal judge ruled in May that Qualcomm unlawfully squeezed out cellphone chip rivals and charged excessive royalties to manufacturers such as Apple.
The Justice Department, however, has backed Qualcomm because of national security concerns; it sees Qualcomm as instrumental to a politically sensitive “race to 5G,” a mobile network upgrade that could mean big technological changes.
The E.U. had already fined Qualcomm $1.23 billion last year after concluding it bribed Apple to stifle competition.
— Associated Press
Microsoft on Thursday reported fourth-quarter revenue that beat analysts' estimates, powered by growth in its flagship cloud product Azure. Total revenue rose 12 percent to $33.72 billion for the quarter ending June 30, above average analysts' estimates of $32.77 billion, according to IBES data from Refinitiv.
— From news services