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Boeing suspends production of 737 Max

Image credit: reuters

The American aerospace manufacturer has put further production of its best-selling 737 Max passenger plane on hold, amid the ongoing fallout from two separate fatal crashes.

In March, the world’s aviation authorities grounded all 737 Max jetliners after 346 people were killed in two crashes (separately involving Indonesia’s Lion Air and Ethiopian Airlines flights) within the space of five months.

The grounding of hundreds of active Boeing aeroplanes coincided with countless investigations, including scrutiny into how the US Federal Aviation Authority (FAA) handles the safety and certification process for new aircraft and the readiness of Boeing's new flight control software, known as the 'Manoeuvring Characteristics Augmentation System' (MCAS).

The grounding has already cost Boeing more than $10bn in revenue and compensation for victims’ families. The company halted deliveries of 737 Max aircraft and reduced production at its US facilities as it awaited permission for its best-selling aircraft to return to service. The company has approximately 400 aeroplanes waiting in storage.

Last week, the FAA stated that it would not approve its return to the skies before 2020. Following the news, and a two-day board meeting in Chicago, Boeing announced that it will suspend production altogether in January 2020. The company said that its decision was the least disruptive to its interests in the long term and that it was motivated by “a number of factors, including the extension of certification into 2020”.

According to FAA administrator Steve Dickson, almost a dozen milestones remain before the 737 Max can return to service, with absolutely no shortcuts taken. Congressional hearings into the disaster have revealed concerns that Boeing was long aware of some flaws in MCAS and may have prioritised fast delivery over safety during the manufacturing process.

US officials told Reuters that certification may not be forthcoming until February or March 2020.

Boeing has stated that no layoffs are planned for the time being, with its 12,000 affected employees in Renton, Washington State, continuing with related work or being reassigned to other teams (Boeing employs approximately 15 per cent of the local workforce), with the company promising to keep employees “top of mind” as it assess its course of action.

However, the freeze is likely to impact many workers involved in Boeing’s international supply chain, as well as employees of the dozens of airlines affected by the continued grounding.

Meanwhile, shares in Boeing's European rival Airbus rose 1.6 per cent, while Boeing’s share price dropped more than 2 per cent.

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