October 30, 2019 / 1:19 PM / 9 months ago

GE still sees $1.4 billion cash cost from Boeing 737 MAX grounding in 2019

FILE PHOTO: The logo of U.S. conglomerate General Electric is seen on the company building in Belfort, France, October 19, 2019. REUTERS/Vincent Kessler/File Photo

NEW YORK (Reuters) - General Electric Co (GE.N) still expects the grounding of Boeing Co’s (BA.N) 737 MAX jetliner to reduce its cash flow by $1.4 billion in 2019, provided the aircraft remains grounded all year, GE Chief Executive Larry Culp said during a conference call on quarterly earnings on Wednesday.

GE and French partner Safran SA (SAF.PA) make engines for the jet.

“As we think about 2020, I think we’re going to try to follow Boeing’s lead here,” Culp said, responding to an analyst question.

“When we talk about the full-year cash headwinds this year due to MAX, that, obviously, assumes that we don’t see a return to service this year,” he said. He added the forecast is conservative.

GE’s chief financial officer, Jamie Miller, said GE still expects “the year to be impacted to the tune of about negative $1.4 billion.” She said it was “difficult to predict” the financial impact on GE in 2020 and beyond.

Boeing has said it expects the jet to clear approval by U.S. regulators by year-end. Global aviation regulators grounded the jet after a second fatal crash last March.

Reporting by Alwyn Scott; editing by Leslie Adler and Chris Reese

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