Boeing Dilemma Intensifies, 737 Manufacturing Ends
On Tuesday, Boeing Co nodded to a growing cash squeeze. It is by deferring commercial 737 productions from January for the first time in more than 20 years.
The issue happened when the instruction of the plane maker’s best-selling MAX had two fatal crashes that drag into 2020.
Boeing, which builds the 737 south of Seattle, indicated it would not lay off any of the estimated 12,000 employees there during the production freeze.
It is even though the shift could have consequences across its global supply chain and the U.S. economy.
The pronouncement at a two-day board conference came after the Federal Aviation Administration declined to approve the jet’s return to service before 2020.
Moreover, the company delivered what was noticed as a public rebuff to Boeing’s prospects of moving faster.
Boeing aims to gain acknowledgment once more and play a significant role in the stock market again after the crisis deepens.
Since March, the 737 MAX has been grounded after two collisions in Indonesia and Ethiopia.
The accidents have killed 346 individuals within five months, costing the plane manufacturer more than $9 billion so far.
On the other side, the decision to terminate production will have a little urgent impact on airlines. These are the ones that have already observed deliveries halted, forcing many to withdraw flights or lease older substitutes.
However, it marks an intensifying crisis that has already witnessed Boeing’s fastest-selling jet grounded worldwide.
In addition, its safety record has inspected customers pressing for reimbursement. The foundation relationship with the FAA is also under strain.
Boeing To Produce Further 737 MAX Jets
Until now, Boeing has persisted in producing 737 MAX jets at a rate of 42 per month.
Meanwhile, the purchase parts from suppliers are at a rate of up to 52 units per month. This is even though deliveries are freezing until regulators authorize the aircraft to fly commercially once again.
Boeing did not say how protracted the shutdown might last. The company has been stressing; this was up to the FAA.
The efforts may predict when the 737 MAX might return to service. It is once the software training changes had attracted a sharp response from the U.S. regulator.
Elsewhere, the FAA stated it would not mention on what it described as a Boeing business decision but would continue to work with global regulators. This is to examine recommended changes to the 737 MAX.
According to the agency, “Our priority is safety, and we have set no timeframe for when the work will be completed.”
Analysts also indicated that the shutdown was predictable. It is after Boeing was obliged to abandon its end-year goal for returning to service.
A senior vice president at Virginia-based consultancy AVITAS, Adam Pilarski, said, “It is not a surprise that they don’t continue producing planes that don’t have a home.”
