Boeing 737 MAX blues: supplier indicates further production cuts

Marco Menezes

Spirit Aerosystems is stopping work on 20 737 MAX shipsets and expects Boeing to cut the airliner production even further. The news comes as the plane manufacturer records yet another month when MAX cancelations exceed order intake in hundreds of planes. 

The company, which makes fuselage, propulsion and wing systems structures for commercial aviation aircraft including Boeing 737 MAX, said it was asked to pause additional work on four 737 MAX shipsets and not to start work on 16 more. According to Spirit, Boeing has expressed the request earlier in June 2020. 

Having previously planned to produce 125 shipsets for Boeing 737 MAX in 2020, Spirit now expects production cuts to affect more than the abovementioned 20 shipsets, the company revealed in a statement on June 10, 2020. However, the exact extent of possible production cuts remains unclear.

“The 737 MAX grounding coupled with the COVID-19 pandemic is a challenging, dynamic and evolving situation,” the statement read. 

Following the release of the news, Boeing shares fell by over 8%, while Spirit shares decreased by over 13% in the premarket trading, according to Barron’s

In May 2020, Boeing recorded a loss of orders for 313 MAX planes, bringing the total number of 737 cancellations to 615 in the year so far (as of May 31).

Spirit Aerosystems unveils new layoffs round

Spirit Aerosystems announced a new round of temporary employee layoffs, attributing the measure to the circumstances surrounding Boeing 737 MAX production uncertainty. The furlough would affect the company’s hourly employees, working directly with 737 MAX production or support. The temporal layoffs are to start on June 15 and last 21 calendar days. Additionally, the Boeing supplier plans to reduce the hourly workforce in two of its sites immediately. 

In May 2020, Spirit fired approximately 1,450 employees, on top of the 3,200 fired in January 2020. 850 workers were expected to use the company’s voluntary retirement program. Since the beginning of the year, the company also eliminated 200 contractor positions. 

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