Boeing's 737 Crisis Deepens As Board Stops Production

Boeing's 737 Crisis Deepens As Production Stops for First Time In Two Decades (excerpt)

(Source: Reuters; published Dec. 16, 2019)

By Eric M. Johnson, David Shepardson

SEATTLE/WASHINGTON --- Boeing Co said on Monday it would suspend production of its best-selling 737 MAX jetliner in January, its biggest assembly-line halt in more than 20 years, as fallout from two fatal crashes of the now-grounded aircraft drags into 2020.

Boeing, which builds the 737 south of Seattle, said it would not lay off any of the roughly 12,000 employees there during the production freeze, though the move could have repercussions across its global supply chain and the U.S. economy.

The decision at a two-day board meeting came after the Federal Aviation Administration (FAA) refused to approve the jet’s return to service before 2020 and delivered what was seen as a public rebuff to Boeing’s hopes of moving faster.

The 737 MAX has been grounded since March after two crashes in Indonesia and Ethiopia killed 346 people within five months, costing the plane manufacturer more than $9 billion so far.

The decision to halt production will have little immediate impact on airlines that have already seen deliveries halted, forcing many to cancel flights or lease older replacements.

But it marks a deepening of a crisis that has already seen Boeing’s fastest-selling jet grounded worldwide, its safety record scrutinized, customers pressing for compensation and its cornerstone relationship with the FAA placed under strain. (end of excerpt)

Click here for the full story, on the Reuters website.

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Boeing Suspends 737 MAX Production Starting In January Due to Certification Moving Into 2020

(Source: Boeing Co.; issued Dec. 16, 2019)

CHICAGO --- Safely returning the 737 MAX to service is our top priority. We know that the process of approving the 737 MAX's return to service, and of determining appropriate training requirements, must be extraordinarily thorough and robust, to ensure that our regulators, customers, and the flying public have confidence in the 737 MAX updates.

As we have previously said, 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.

Throughout the grounding of the 737 MAX, Boeing has continued to build new airplanes and there are now approximately 400 airplanes in storage.

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. (Emphasis added—Ed.)

We believe this decision is least disruptive to maintaining long-term production system and supply chain health. 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.

During this time, it is our plan that affected employees will continue 737-related work, or be temporarily assigned to other teams in Puget Sound. As we have throughout the 737 MAX grounding, we will keep our customers, employees, and supply chain top of mind as we continue to assess appropriate actions. This will include efforts to sustain the gains in production system and supply chain quality and health made over the last many months.

We will provide financial information regarding the production suspension in connection with our 4Q19 earnings release in late January.

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