Following a meeting of its board of directors in Chicago, Boeing decided to interrupt the production of the 737 MAX from January 2020 in order to prioritize the delivery of stored aircraft. The plane has now been grounded for nine months, following two crashes that killed 346 people.
The decision is motivated by the recent confirmation from the U.S. Federal Aviation Administration (FAA) that the certification would not happen in 2019. “We believe this decision is least disruptive to maintaining long-term production system and supply chain health,” announced the manufacturer in a press release, adding “we will continue to assess our progress towards return to service milestones and make determinations about resuming production and deliveries accordingly.”
Boeing has not said how long it expected the production shutdown to last. The manufacturer that not so long ago was still anticipating a return to service by the end of the current year saw its hopes definitely crushed on December 12, 2019, when FAA administrator Steve Dickson confirmed the Boeing 737 MAX would not be certified before 2020.
From 52 aircraft assembled per month before the grounding, Boeing had reduced its production output to 42. It has now more than 400 planes, valued at $20 billion at list price, waiting to be delivered to their operators once the grounding is lifted. The Boeing 737 MAX has accumulated more than 4,500 orders to date.
For now, the 12,000 employees of Renton Final Assembly Line, Washington, should not see their position threatened. Some of them could be redeployed to other facilities in the region.
However, the suppliers and subcontractors involved in the MAX program could be severely affected. Those will require financial support from Boeing in order to maintain their industrial capabilities available when production will resume. “We estimate that Boeing is burning nearly $2 billion per month on the MAX but this will not drop to zero during the halt,” JPMorgan analysts said, as reported by Reuters.
The manufacturer will present the total cost of the suspension in January 2020, during its yearly financial report.