(Corrects $707 mln line-item loss from Boeing Capital to “other unallocated items” in para 5 and amends 1st para to reflect this)
April 24 (Reuters) - Boeing removed 210 aircraft from its order backlog to reflect concerns about customer credit quality and took a customer financing impairment on Thursday.
The U.S. planemaker did not disclose the name of the airline involved but the move came days after India’s Jet Airways halted operations after lenders rejected a plea for emergency funds.
The order adjustment pushed Boeing net orders into negative territory up to the end of March, with a total of minus 119 net orders despite a slew of wide-body orders in Europe and Asia.
Under recent changes in accounting rules, Boeing hives off orders that do not meet its criteria for recognising revenue into a separate category, while holding onto contractual claims.
Boeing also posted a first-quarter operational loss of $707 million in a specific category grouping together certain unallocated items compared with a loss of $326 million a year earlier. Overall, it posted a $2.35 billion operating profit.
“The change in earnings from other unallocated items and eliminations is primarily due to a customer financing impairment, higher deferred compensation expense and increased enterprise research and development investment,” it said.
Industry sources says customer finance business Boeing Capital is carrying 75 orders for Jet in addition to some 125 that the airline has on order directly from Boeing.
A Boeing spokesman declined to comment on the identity of the airline involved in the order reduction or impairment. (Reporting by Tim Hepher; Editing by Matthias Blamont/Sudip Kar-Gupta)