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Boeing's 737 Max debacle could be the most expensive corporate blunder ever

November 17, 2020. Summarized by summa-bot.

RENTON, WA - NOVEMBER 13: A worker walks by a Boeing 737 Max airplane as it sits parked at the company's Renton production facility on November 13, 2020 in Renton, Washington. Boeing has announced new cancellations of orders of the plane as it readies for approval to fly it again. (Photo by David Ryder/Getty Images)

The 20-month grounding of the 737 Max could end as soon as this week, but Boeing's mounting costs have soared to tens of billions of dollars. That means the plane maker's repeated safety oversights and mismanagement were not only tragic but also rank among the expensive corporate mistakes in history.

New York (CNN Business)The 20-month grounding of the 737 Max could end as soon as this week, but Boeing's mounting costs have soared to tens of billions of dollars.

Boeing has detailed about $20 billion in direct costs from the grounding: $8. 6 billion in compensation to customers for having their planes grounded, $5 billion for unusual costs of production, and $6. 3 billion for increased costs of the 737 Max program.

So the costs of the grounding released by Boeing total $20. 7 billion.

Boeing borrowed billions of dollars at a roughly 5% interest rate to keep building 737 Max planes it can't deliver.

But the expert said it might be as much as a $20 million discount per plane, or roughly $25 billion total — more than doubling the true cost of the grounding.

Discounting many of the 3,300 other Max orders still on the books could make Boeing's total cost of its 737 Max debacle climb even higher, perhaps past the $68 billion price tag of Deepwater Horizon.

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