Boeing is suspending production of the 737 Max in January
Boeing will halt production of its 737 Max narrow-body jet in January, escalating the company’s crisis as it prepares to end a year marked by accidents, scandals, and a plummeting public perception. The Wall Street Journal first reported the halts, citing a person briefed on the matter.
The prospect of assembly being halted was raised over the weekend. Boeing first suggested in July that it could slow or suspend production if the jet remained grounded going into 2020.
Boeing’s 737 Max has been grounded worldwide since the crash of Ethiopian Airlines Flight 302, the second of two fatal crashes involving the jet within five months.
The plane maker’s Renton, Washington, factory, where the 737 Max is manufactured, employs 12,000 workers. A Boeing spokesperson told Business Insider that no furloughs or layoffs were expected “at this time” and that employees would continue 737-related work, or be temporarily assigned to nearby teams. It was not clear whether Boeing’s other facilities could absorb employees through a prolonged production halt.
Throughout the time the 737 Max has been grounded, Boeing has continued to produce new units for customers, but it reduced its production rate from 52 planes a month to 42 starting in April. However, because of the grounding, Boeing has not been able to deliver the planes to customers and collect payment, which has led to a growing pile-up at Boeing’s various storage facilities.
The manufacturer said it had a backlog of 400 undelivered planes in storage.
Boeing had hoped that the plane would be cleared to return to service by the end of 2019. Even once it became clear that the plane would not be able to reenter commercial service by then, Boeing’s leadership expressed optimism that it could begin delivering the completed planes this December in preparation for the FAA’s certification.
Earlier this month, the FAA said that Boeing’s timeline was “not realistic” as a previously undisclosed study, in which, after the first crash, the FAA found that the Max had a high risk of future crashes if not fixed, was released by a Congressional committee investigating Boeing and the FAA.
American Airlines announced last week that it would cancel Boeing 737 Max flights until at least April 7. United Airlines and Southwest have cancelled flights through the first week of March.
The production halt raised further concerns among aerospace manufacturers who supply components for the 737 Max., and raised concerns about impacts to the US economy. Boeing is the nation’s largest exporter. Suppliers including Spirit AeroSystems, based in Wichita, Kansas, CFM International, and as many as 600 other firms and hundreds of smaller subcontractors, could all be impacted.
Boeing’s stock was down 4.29% at the close on Monday.