Boeing to halt or reduce 737 Max production as crisis extends into 2020

Planemaker may announce its decision as soon as Monday, WSJ reports

Employees work on Boeing 737 Max jets at the factory in Renton, Washington. Boeing may soon announce whether to further cut or suspend production of its grounded 737 Max plane. AFP 

Boeing is weighing a decision to either halt or reduce production of its 737 Max as the grounded jet's return to service slides into 2020, extending the nine-month crisis.

The company may announce a decision as soon as Monday, after the US plane maker's board began a meeting Sunday in Chicago, with Boeing management leaning towards pausing production as the most viable among tough choices, the Wall Street Journal reported citing people familiar with the matter.

"We continue to work closely with the FAA [Federal Aviation Administration] and global regulators towards certification and the safe return to service of the MAX," a Boeing spokeswoman said in an emailed statement. "We will continue to assess production decisions based on the timing and conditions of return to service, which will be based on regulatory approvals and may vary by jurisdiction.”

The production plans for the 737 Max, Boeing's best-selling plane, are becoming more urgent after the US aviation regulator said it would not certify the revamped jet this year. The unprecedented grounding of the Max since March came after the model was involved in two deadly crashes in Ethiopia and Indonesia over the span of five months that claimed 346 lives.

Scaling back production - on top of the 19 per cent reduction in April -would increase Boeing's costs, spur job cuts across the global aerospace industry, and cause further disruptions to airline operators hit by the grounding.

Boeing board deliberations, which were slated to last through Monday, have become more urgent following a meeting last week between Boeing chief executive Dennis Muilenburg and FAA chief Steve Dickson that reset the likely timetable for certification to February or beyond, the Journal said.

The production changes are not certain and any management action would occur in close consultation with the board, the newspaper said.

No immediate job cuts are expected because of the previously scheduled closing of the 737 assembly plant in Renton, Washington, for Christmas and New Year’s holidays, it said. The holiday break typically lasts about two weeks.

Boeing said in October that if it did not get regulatory approval to resume deliveries by year-end, it could be forced to further rollback production or temporarily shut down the Max production line, a step that would have repercussions across its global supply chain.

Highly skilled workers from the 600 mostly US companies building components for the jet could face  widespread layoffs amid an already tight US job market.

Alexandre de Juniac, director general of International Air transport Association (Iata), said the latest delays to the plane’s return to commercial service meant airlines are adversely affected because of cancelled flights but the reduction in capacity could help improve yields.

“It’s delayed by one month every month,” he said last week in Geneva during Iata's annual media gathering.