A regulatory probe into the profit projections for two of Boeing’s top jetliners has sent shares of the aircraft manufacturer plummeting in afternoon trading.
Boeing’s (BA) stock dropped more than 11% Thursday after Bloomberg reported that the U.S. Securities and Exchange Commission is investigating accounting practices that led to the company’s long-term profitability forecasts for its 787 Dreamliner and the 747 jumbo aircraft.
According to Bloomberg, which cites anonymous sources in its report, the SEC probe focuses on the reporting practice of program accounting, which companies often employ to lessen the blow of large upfront manufacturing costs on their financial statements by dividing the costs across reports for multiple years. While regulators regularly allow the practice in the aerospace industry, it can be subject to abuse, particularly when companies do not properly update estimates for costs and sales.
When reached by Coins2Day for comment on the SEC probe, Boeing spokesman Chaz Bickers said: “W e typically do not comment on media inquiries of this nature.”
As Coins2Day has reported, Boeing incurred great costs in rolling out the 787 Dreamliner and the company has also had to deal with a slowdown in the 747 jumbo’s sales. On Wednesday, Boeing announced that it will try to save money by cutting jobs in its commercial airplane unit. Last month, the company reported a nearly 4% drop in fourth-quarter revenue and offered a lower forecast for 2016 commercial aircraft sales than analysts had expected, which also sent Boeing shares tumbling.
The company’s stock is now down nearly 28% since the start of 2016.