U.S. aerospace giant Boeing’s shares dived Thursday amid speculation that regulators are investigating its accounting for its 787 and 747 aircraft.
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The SEC suspects that Boeing had not taken into account all the costs involved in the two aircraft programs in their long-term profitability outlook.
Both the SEC and Boeing declined to comment on whether an investigation is underway.
The latest 747 and 787 aircraft have been plagued by delays, including some embarrassing mishaps with the 787’s on-board batteries. The company’s shares dropped from its highest trading price of $158.83 each to as low as $102.10 each.
The whistleblower submitted internal documents and data about Boeing’s accounting method, according the people with knowledge about the situation. Spirit AeroSystems Holdings Inc, one of Boeing’s largest suppliers, fell 10% at one point, though the shares recovered partly and were down 5.6% at $42.41 in the early afternoon.
The process is acceptable under accounting rules but companies must update the figures they have projected as new aircraft programmes mature and companies get a more accurate picture of the true costs.
The report said that Boeing utilized a method called program reporting to distribute massive upfront manufacturing costs over many years.
Over the past year, the aerospace company lost more than 29% of stock value.
Boeing has delivered 363 “Dreamliner” 787s over the past three years and it has orders for 779 more. The 787 programme has an accounting block spread over a production run of 1,300 aircraft.
A new version of the 747 the 747-8 is also performing poorly, with 102 delivered and further orders for just 19, with the company estimated to need to sell at least another 30 to make its money back.
Boeing has previously had its use of programme accounting questionned.
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“To win in the market, fund our growth and operate as a healthy business, we are taking thoughtful steps to reduce the cost of designing and building our airplanes, part of which involves evaluating our employment levels across all of Commercial Airplanes”, Conner told staff, according to a statement from a Boeing spokesman.
