Boeing Co. said late Thursday it will record an after-tax charge of $4.9 billion, or $8.74 a share, in the second quarter in connection with the 737 Max groundings.
The charge will result in a $5.6 billion dent in revenue and pre-tax earnings in the quarter, Boeing said. Boeing is expected to report second-quarter earnings on Wednesday.
Boeing BA, -2.28% also warned that the estimated costs to produce the aircraft increased by $1.7 billion in the second quarter, primarily due to higher costs associated with a longer-than-expected reduction in the production rate.
The increased costs will reduce the margin of the 737 program in the second quarter and in future quarters, the company said.
The 737 Max family has been grounded worldwide since March after a second fatal crash in less than five months. Boeing has been working on a software fix for one of the plane’s anti-stall features, believed to be involved in the crashes.
Shares of Boeing rose 1.6% in the extended session Thursday. It had ended the regular trading session down 2.3%. The stock is up 12% this year, compared with gains of 17% for the Dow Jones Industrial Average, DJIA, +0.01% of which it is a component.
Analysts polled by FactSet expect Boeing to report adjusted earnings of $1.80 a share on sales of $20.3 billion in the quarter. That would compare with adjusted earnings of $3.33 a share on sales of $24.3 billion a year ago.
Earlier this week, United Airlines UAL, +0.53% and American Airlines AAL, +1.44% announced more flight cancellations due to the grounding.