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Boeing’s Suspension of 737 Max Production Stirs Industry

After its year-end board meeting, Boeing announced the suspension of 737 MAX production, starting January.

READ BOEING STATEMENT: 737 MAX PRODUCTION

The aircraft manufacturer said in a statement, “This decision is driven by a number of factors, including the extension of certification into 2020, the uncertainty about the timing and conditions of return to service and global training approvals, and the importance of ensuring that we can prioritize the delivery of stored aircraft. We will continue to assess our progress towards return to service milestones and make determinations about resuming production and deliveries accordingly.”

While the planes may be airborne sooner, analysts estimate that it could be well into 2022, maybe even 2023, before Boeing is able to put its 737 Max problems behind it, stated a CNN report.

According to a Reuters report, the production halt has kicked-off a tough negotiation between the aircraft manufacturer and its largest 737 supplier, Spirit AeroSystems Holdings Inc. Spirit has staffed its factory with enough workers to maintain a pre-crisis build rate of 52 aircraft per month and to enable a smooth step-by-step eventual increase to 57 aircraft. But with the new situation, where Boeing will look at conserving cash, it may stop paying Spirit to build and store fuselages at those rates.

The ripple effects of Boeing’s decision were felt around the world on Tuesday as shares in global suppliers to the US planemaker fell sharply.

The grounding has already cost Boeing more than US$9bn in customer compensation and extra costs. The 737 Max was previously Boeing’s best-selling plane, with 580 deliveries during 2018. Boeing’s overall deliveries had fallen by half during the first nine months of the year.

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