Boeing warns it may stop 737 Max production

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Boeing is warning that it might have to halt production of the 737 Max if grounding continues much longer.

The company reported its largest-ever quarterly loss of $3.4bn (£2.7bn) on Wednesday due to the troubled plane.

If hurdles with regulators worldwide continue, Boeing said it would consider reducing or shutting down production of the 737 Max entirely.

However, Boeing boss Dennis Muilenburg is confident the plane will be back in the air by October.

“As our efforts to support the 737 Max’s safe return to service continue, we will continue to assess our production plans,” Mr Muilenburg told investors in a conference call.

“Should our estimate of the anticipated return to service change, we might need to consider possible further rate reductions or other options, including a temporary shutdown of the Max production.”

Boeing’s entire fleet of flagship 737 Max planes was grounded in March after issues with the model were linked to an Ethiopian Airlines flight crash that killed 157 people.

Five months earlier, 189 people were killed when a Boeing 737 Max operated by Lion Air crashed.

Awaiting approval

As investigations into the two crashes continue, Boeing has been working on fixes for its Mcas anti-stall flight control software, as well as other issues identified by regulators, including the US Federal Aviation Administration.

Boeing, which has customers in 150 countries, is still waiting for approval from regulators.

Mr Muilenberg said the planemaker had been holding weekly technical calls with operators of the 737 Max, while the modified software had so far been tested in 225 flight simulator sessions.

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Media captionThe Mcas system explained

“These are challenging times, first and foremost, for the families and loved ones who are affected by these recent events, and also for our dedicated people, who work tirelessly to deliver on our mission to connect, protect, explore and inspire the world, all with a relentless focus on quality and safety and doing so with the utmost integrity,” he stressed.

“This is a defining moment for Boeing and we’re committed to coming through this challenging time better and stronger as a company.”

Spiralling costs

After the two crashes, production of the 737 Max was reduced from 52 to 42 aircraft per month, Mr Muilenburg said.

The knock-on effect of this move is that Boeing has to pay more for plane parts than before, which are priced according to the volume purchased by the planemaker.

Having to suspend deliveries of new 737 Max planes to airlines has also hit Boeing’s cash flow and profit margins.

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Image caption

Grounded Boeing 737 MAX aeroplanes stored near Boeing Field in Seattle, Washington

Further reducing production of the plane would compound these problems, which could lead Boeing to halt production of the 737 Max completely – a move the company has not taken since it halted production of the 747 for 20 days in 1997, when demand outstripped supply of parts.

The grounding of the 737 Max and the cuts in production have both affected Boeing’s customers and are likely to continue to cause plane delivery delays in the future, Mr Muilenberg acknowledged.

“I want to personally thank everyone who continues to be our partner in this journey; from our airline customers and their pilots, flight attendants and others who have been impacted by these groundings, representatives from all levels of government who share our commitment to safety for the flying public and everyone in the aviation community impacted by these events,” he said.

“We are grateful for your support and we will continue striving to earn and re-earn your trust.”

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