Mon. Apr 22nd, 2019

Boeing cuts production of 737 to check safety

Boeing recorta la producción del 737 un 19%

Boeing It will cut production of its 737 aircraft by mid-April and set up a special board panel to review safety and design after two fatal crashes that prompted regulators around the world to keep the newest and best-selling model on the ground of the airplane family.

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The aircraft manufacturer will temporarily reduce its production rate to 42 aircraft per month, below the current rate of 52 per month. Boeing plans to coordinate with clients and suppliers to mitigate the financial impact of the slowdown, and for now it does not plan to fire 737 workers, said Boeing executive director Dennis Muilenburg.

"When the Max returns to the skies, we promised our airline customers and their passengers and crews that they will fly as safely as any plane," Muilenburg said in a statement Friday after the market closed.

Boeing had planned to increase production of the 737, a workhorse for airlines offering low-fare tickets, about 10 percent by mid-year. The suppliers that provide the 600,000 parts needed for each aircraft had already begun to advance at a monthly rate of 57 aircraft under a carefully planned and established schedule long before the disasters of Lion Air and Ethiopian Airlines.

Preserve the cash

With the 737 Max now grounded indefinitely, the slowdown in production will help Boeing preserve cash. The Chicago-based automaker faces losses of between $ 1,500 and $ 2,700 million a month, as customers suspend advance payments for aircraft whose deliveries are suspended, said Seth Seifman, analyst at JP Morgan.

Boeing's announcement comes a day after Ethiopian officials released a preliminary report on Max's latest crash, concluding that he experienced the same equipment failure as a Lion Air 737 that crashed in Indonesia in October. The two incidents took the lives of a total of 346 people.

If regulators take time to certify Max's return to the skies, Boeing would be forced to hide hundreds of factory-delivered aircraft at airports across the western United States. until commercial flights resume. As of Friday, there were 21 aircraft stored at Paine Field, north of Seattle, and eight at Boeing Field, south of the city, according to 737 model blogger Chris Edwards.

The discount squeezes suppliers who hired workers and invested to expand capacity. With order books sold until 2023, Boeing and Airbus SE reflected on increasing production at a monthly rate of 70 aircraft for the next decade.

"Everyone is waiting with a certain level of anguish," Stephen Perry, co-founder of Janes Capital Partners, a boutique investment bank that specializes in aerospace deals, told Boeing's suppliers in a recent interview.

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