Boeing studies 737 MAX output slowdown among scenarios

PARIS, WASHINGTON:  Boeing and suppliers are looking at scenarios including a slowdown in production of the 737 MAX if the plane’s grounding in the wake of two accidents lasts for a number of months, as many analysts expect, a person familiar with the process said.

Boeing declined to comment.

Deliveries of Boeing’s best-selling aircraft were frozen after a global grounding of the narrowbody model following the crash of an Ethiopian Airlines jet on March 10.

Boeing assembles 52 737-family aircraft per month and its newest version, the MAX, represents the lion’s share of this production, although Boeing has declined to give exact numbers.

Boeing had been planning to speed up production again in June to 57 a month.

Shares in Boeing Co fell around one percent, before retracing part of their losses against a slightly firmer market.

The 737 MAX is banned from flying in most countries across the world following the Ethiopian Airlines crash that killed all 157 people on board. It was the second deadly incident for the relatively new Boeing model in five months.

Boeing faces logistical issues in finding places to park the growing number of grounded 737 MAX planes as well as being responsible for all their maintenance costs since it has been unable to deliver the jets to customers, two other people briefed on the situation said.

Manufacturers avoid halting and then resuming production as this disrupts supply chains and can cause industrial snags.

One source said it would take up to 6 months to re-start production of such a complex supply chain once it had been stopped, but cautioned a complete halt was unlikely.

Having to hold planes in storage without delivering them does however consume extra cash through increased inventory.

Source from: The Peninsula