Boeing stock plunges on report of SEC accounting probe

USA aerospace giant Boeing’s shares dived Thursday amid speculation that regulators are investigating its accounting for its 787 and 747 aircraft. They are reviewing the company’s use of program accounting, which allows Boeing to accelerate the large upfront costs of making a plane over multiple years.

A Boeing spokesman said the company does not typically comment on such matters.

Bloomberg reported that official documents and data about accounting practices at Boeing were given to the SEC by an anonymous whistleblower. SEC policy is not to reveal the identities of whistleblowers.

This means that aircraft delivered early in the production run show up on Boeing’s balance sheet with a profit, even though each costs significantly more to build than Boeing’s sale price.

The latest 747 and 787 aircraft have been plagued by delays, including some embarrassing mishaps with the 787’s on-board batteries.

The company has also already incurred $28.5 billion in expenses for building the 787s. Both planes are among Boeing’s most iconic, renowned for the technological advancements they introduced, as well as the development headaches they brought the company. The stock’s previous biggest price drop was $11.43 (8.9%) on January 27, 2016 after Boeing reported fourth-quarter results.

The staff reductions will begin with executives and managers, Conner said.

Boeing’s stock has lost around one-third of its value since reaching a historic peak on 21 February a year ago at $158.31. By contrast, the 777 developed an inflation-adjusted $3 billion in production losses before the programme turned profitable. The company has only had 121 orders for the jet since 2005, and most of those sales came before the 2008 financial crisis.

Noting that “the hits keep coming” for Boeing, he added: “This is not good news, and adds to what is already proving to be a tough year for Boeing“.

But he said that involuntary layoffs may be necessary “as a last resort”.

Jason Gursky, senior aerospace and defense analyst with Citigroup, isn’t as optimistic. He said the 747 order book is “very weak”.