***UPDATE: 12/16/19 @ 23:15 UTC – Added Boeing’s official press release***
Boeing may suspend 737 MAX production as soon as January, as the aircraft type continues to remain grounded with no solution yet in sight.
Why is Boeing 737 MAX production being halted?
According to a recent report by the Wall Street Journal, the airframe builder is set to suspend the production of the 737 MAX series by mid-January.
“We have previously stated that we would continually evaluate our production plans should the MAX grounding continue longer than we expected. As a result of this ongoing evaluation, we have decided to prioritize the delivery of stored aircraft and temporarily suspend production on the 737 program beginning next month.” – Boeing press release
The Boeing 737 MAX is the notorious aircraft that crashed twice within five months with all souls lost on board, thanks to a faulty sensor feeding incorrect information to the flight computer.
Despite being grounded by all airspace regulators across the world, Boeing has continued to produce around 40 aircraft a month. These aircraft, once built, have been stocking up in various Boeing facilities, spilling out of the gates and into employee carparks.
In fact, Boeing has so many of these 737 MAX aircraft ready to be delivered (over 400) that there are plans to employ hundreds of new team members just to deliver them all when the ban is lifted.
But that’s just it. When or perhaps if, seems to be the case now at Boeing. The manufacturer is now planning to pause its production in order to reduce costs. All the while they are building the planes, they are spending on wages and materials but can’t actually collect any money back.
The Verge, who is also covering this story, wrote that in addition to reducing costs the 737 MAX program that Boeing will also “prioritize the delivery of stored aircraft and temporarily suspend production on the 737 program” in order to maintain “long-term production system and supply chain health.”
Currently, the industry estimate is a March or April lifting of the flight ban.
“The FAA and global regulatory authorities determine the timeline for certification and return to service. We remain fully committed to supporting this process. It is our duty to ensure that every requirement is fulfilled, and every question from our regulators answered.” – Boeing statement.
What will the ramifications be of this news?
The first to move has been the stock market. Boeing shares have taken a dip of around 4.47% as market forces project what this news will mean for the firm.
Boeing will likely be forced to furlough workers and anyone else involved with the production of the 737 MAX, and likely some of the staff at the head office who now have nothing to oversee.
Plus all those suppliers who have been sending engines, components, seats, etc are now looking like their cash cow contracts for the 737 MAX, once sought out by the industry and likely their biggest deal to date, to end. This could mean thousands of job losses across the industry.
But according to the BBC who spoke to Boeing this afternoon, Boeing plans to relocate as many employees as possible, “continue 737-related work, or be temporarily assigned to other teams”.
What do you think of this news? Let us know in the comments.