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  • August 2017 (Revised September 2018)
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Accounting Turbulence at Boeing

By: Jonas Heese, Suraj Srinivasan, David Lane and James Barnett
  • Format:Print
  • | Language:English
  • | Pages:25
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Abstract

Unlike its rival Airbus, Boeing had used a practice called program accounting to record its commercial aircraft expenses since the 1980s. Program accounting allowed Boeing to expense estimated average costs instead of the actual production costs of an aircraft. This practice lowered the effect of the initially high costs of manufacturing new aircraft models on Boeing’s profitability and reflected potential learning efficiencies that could drive down manufacturing costs over time. By 2016, Boeing had deferred about $27 billion in production costs related to its 787 program. If Boeing had been forced to expense these costs, it would have shown profits of $1.4 billion between 2012 and 2016 instead of $25.2 billion, raising questions about Boeing’s true profitability.

Keywords

Asset Recognition; Program Accounting; Airline Industry; Accounting; Production; Cost; Air Transportation Industry

Citation

Heese, Jonas, Suraj Srinivasan, David Lane, and James Barnett. "Accounting Turbulence at Boeing." Harvard Business School Case 118-020, August 2017. (Revised September 2018.)
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About The Authors

Jonas Heese

Accounting and Management
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Suraj Srinivasan

Accounting and Management
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Related Work

    • October 2017 (Revised March 2024)
    • Faculty Research

    Accounting Turbulence at Boeing

    By: Jonas Heese and Suraj Srinivasan
    • April 2019
    • Faculty Research

    Accounting Turbulence at Boeing

    By: Jonas Heese and Suraj Srinivasan
    • August 2017 (Revised September 2018)
    • Faculty Research

    Accounting Turbulence at Boeing

    By: Jonas Heese, Suraj Srinivasan, David Lane and James Barnett
Related Work
  • Accounting Turbulence at Boeing By: Jonas Heese and Suraj Srinivasan
  • Accounting Turbulence at Boeing By: Jonas Heese and Suraj Srinivasan
  • Accounting Turbulence at Boeing By: Jonas Heese, Suraj Srinivasan, David Lane and James Barnett
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