Boeing considers cutting 737 Max production

Boeing is discussing a cut or suspension of the production of its MAX 737 airliner in the wake of an FAA decision to delay its approval of the return of the aircraft to service.

David Shepardson had the news for Reuters:

Boeing Co is considering whether to cut or halt production of its grounded 737 MAX after the Federal Aviation Administration said last week it would not approve the plane’s return to service before 2020, a person briefed on the matter said on Sunday.

The largest U.S. planemaker’s board of directors is holding a regular two-day meeting in Chicago starting Sunday and the company could make an announcement on production plans as soon as late Monday, the person said.

The Seattle Times reported Sunday the board is considering a proposal from top management to temporarily shut down 737 production. The person briefed on the matter told Reuters a temporary shutdown is more likely than another production cut, but it would potentially take a few weeks before production could be halted.

Boeing said in a statement Sunday the company “will continue to assess production decisions based on the timing and conditions of return to service, which will be based on regulatory approvals and may vary by jurisdiction.”

CNBC’s Spencer Kimball reported the decision could be announced today:

Boeing could disclose as early as Monday a decision on whether further cut or suspend production of the 737 Max amid continued uncertainty about the beleaguered plane’s return to service, The Wall Street Journal reported on Sunday.

The company has repeatedly warned investors that it could cut output of the planes again or temporarily shut down its production line altogether if the flight ban drags on longer than it expected. Boeing CEO Dennis Muilenburg has said that suspending production could be “more efficient” than lowering output again.

Boeing, whose board is holding a regularly scheduled meeting in Chicago on Sunday and Monday, cut 737 Max production in April by 20% from 52 aircraft a month to 42 a month in the wake of a second fatal crash of the best-selling plane within five months. Regulators around the world responded to those crashes by grounding the aircraft.

Rene Marsch from CNN wrote:

Boeing CEO Dennis Muilenburg warned in July that Boeing would be forced to consider slowing or shutting its 737 Max production if there were any further delays in winning approval to fly the 737 Max again beyond the fourth quarter.

That delay became apparent at a meeting last week between the Federal Aviation Administration (FAA) and Boeing in which the company said it came away understanding the 737 Max jet would not be cleared to fly this calendar year.

The planes were grounded worldwide in March after two fatal crashes — a Lion Air jet into the Java Sea in October 2018 and an Ethiopian Airlines plane near Addis Ababa in March — killed 346 people.

Boeing has been building 42 737 Max jets a month since the grounding, so as not to cause hardship for suppliers or be forced to lay off workers it will need later. But the company has not been able to deliver the planes. That halt comes at a tremendous cost to Boeing, since it makes most of the revenue it gets for selling a plane once it is delivered.