Boeing Shares Fall on Probe Report
February 11 2016 - 2:10PM
Dow Jones News
Boeing Co. shares plunged Thursday following a media report that
the Securities and Exchange Commission is probing the aerospace
group's accounting methods on two of its jetliner programs.
The SEC is investigating whether Boeing properly accounted for
the long-term costs and expected sales of its 787 Dreamliner and
the 747 aircraft, Bloomberg News reported, citing people with
knowledge of the matter. SEC enforcement officials haven't reached
any conclusions and could decide against bringing a case, the
report said.
Boeing declined to comment on the Bloomberg report. "We
typically do not comment on media inquiries of this nature," said
John Dern, a Boeing spokesman. The SEC declined to comment.
Shares in Boeing, the world's largest aerospace company by
sales, were down more than 10% in midday trading Thursday. That put
it on pace for possibly one of the biggest declines in the stock's
history, exceeding an 8.9% drop late last month on the day Boeing
issued disappointing financial guidance that was the biggest
single-day drop since 2001.
The report also fueled a sell-off in other aerospace stocks at a
time when investors in the sector have become increasingly nervous
that a multiyear boom in aircraft orders could founder as Boeing
and rival Airbus Group SE boost production to record levels.
Boeing uses a method called program accounting for its jetliners
that enables it to spread the multibillion-dollar costs of
developing new airliners over many years of the jet program's
expected production. Under the method, which is compliant with
Generally Accepted Accounting Principles, Boeing has been able to
report consistent profits on the Dreamliner program even though it
has cost more to build each plane than Boeing has gotten selling
them.
Robert Wall and Aruna Viswanatha contributed to this
article.
Write to Doug Cameron at doug.cameron@wsj.com and Jon Ostrower
at jon.ostrower@wsj.com
(END) Dow Jones Newswires
February 11, 2016 13:55 ET (18:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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