Reports today suggest that Boeing is eyeing a return to production of the 737 MAX by May this year. The manufacturer still anticipates a mid-year return to service of the aircraft, and has told its suppliers to be ready to start shipping parts for the aircraft by the end of April. But with the uncertainty over the current coronavirus outbreak leaving many of Boeing’s customers strapped for cash, is the US planemaker being somewhat overly optimistic?
In an exclusive by Reuters, Boeing was revealed to be planning a restart of its 737 MAX production by May. The fabrication of the aircraft has been paused since December last year, as the jet remained grounded following two tragic crashes of the type.
With production halted, the impact has been felt not just at Boeing itself but also right through its supply chain. Supplier Spirit AeroSystems, a provider of parts for the 737 MAX, announced in January it would be offering as many as 13,000 employees voluntary layoffs in a bid to rein in the losses caused by the MAX production stop.
Although production was stopped, Boeing employees were initially kept in place, with tasks redirected towards preparing the 500 or so grounded aircraft at Boeing’s facilities for delivery to airlines once the flight ban is lifted. Now, it seems a restart to production could happen as soon as May.
Parts to be shipped in April
A source reported by Reuters has suggested that Boeing has asked its suppliers to be ready to start shipping parts for the 737 MAX in April, with a view to restarting production in May. However, this is apparently a slip to the original timetable, as one source told Reuters that production was intended to restart in April, but the current global pandemic has pushed the timeline out to May.
When asked about the targeted production restart of May, Boeing’s chief financial officer Greg Smith told Reuters,
“It’ll be a very slow, methodical, systematic approach to warming the line up, and getting crews back in place. Priority number 1 is getting customers’ fleets back up.”
He added that any restart in production and subsequent ramp-up of capacity would need to be paired with getting the completed jets delivered to customers. He added,
“We don’t want to add to inventory.”
What about the impact of COVID-19?
The one factor that remains an unpredictable influence in the MAX production restart remains the global outbreak of COVID-19. The situation could hamper Boeing’s ability to restart the 737 MAX production, as well as the capacity of its suppliers to deliver the necessary parts.
Yesterday, Boeing announced a closing down of all its Washington State facilities starting today. This followed reports of dozens of confirmed cases of COVID-19 in its workers, as well as an alleged death of one of its workers from the virus.
Not only does the pandemic create problems for Boeing in terms of being able to resume operations, it could also mean its customers are less willing to take their deliveries. We’ve already seen a number of airlines deferring deliveries of new planes, and with no end in sight to the global travel shutdown, airlines could be less than willing (or able) to take on a bunch of new planes.
As airlines typically pay the balance for the ordered aircraft on delivery, Boeing’s restart plan also hinges greatly on its customers having some money left. With the majority of the world’s airlines in financial strife, the manufacturer does seem a little over-optimistic regarding its timeline for action.
And, of course, all this is still dependent on the FAA approving the 737 MAX to fly. Chances are their attention is somewhat divided right now.
What do you think? Is a May production restart feasible, or is Boeing being overly optimistic? Let us know in the comments.