Boeing is heading for the largest quarterly loss in its history due to a huge earnings hit from the grounding of its 737 MAX jets.

Ahead of next week’s second-quarter earnings report, the company announced Thursday it will take a $4.9 billion after-tax accounting charge “in connection with an estimate of potential concessions and other considerations to customers for disruptions related to the 737 MAX grounding and associated delivery delays.”

The charge — equal to $8.74 per share — will result in a loss of around $3.6 billion. Analysts had been projecting a profit of $1.3 billion.

“The MAX grounding presents significant headwinds and the financial impact recognized this quarter reflects the current challenges and helps to address future financial risks,” Boeing CEO Dennis Muilenburg said in a news release.

On news of the charge, Boeing shares rose 1.7% to $367.28 in after-hours trading Thursday. “This adds certainty and for the first time puts an expected return to service timeline out there, which we think is positive,” Jim Corridore, aerospace analyst at CFRA Research, told the Financial Times.

But Boeing also warned of possible further turbulence ahead, noting it was assuming that regulatory approval to resume MAX flights will be granted in the fourth quarter and that the production rate will increase from 42 planes per month to 57 per month in 2020.

“Any changes to these assumptions could result in additional financial impact,” Boeing said.

The 737 MAX was taken out of service globally in March after two deadly crashes in Ethiopia and Indonesia killed 346 people.

“The size of the charge underlines the magnitude of the crisis Boeing is facing,” the FT said, adding that the writedown “does not include less tangible cost to Boeing’s reputation, which has taken a hit as it has repeatedly revealed new problems with the plane, and delays in getting it fixed to return safely to the air.”

The Seattle Times also reported that Boeing now expects the cost of producing the MAX to increase by $2.7 billion, making it less profitable.

Stephen Brashear/Getty Images

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