The go-around was postponed until this summer.
January 21 CNN reported that Boeing acknowledged that the Washington-based assembly line has temporarily suspended production of the company’s best-selling aircraft model, the 737 Max. Boeing said in December that it plans to discontinue production of the model for a period of time, but has not announced an exact date of discontinuation.
Boeing claims that the company will not take vacations or layoffs as a result of the shutdown. But given the long supply chain of aircraft manufacturing, the number of companies affected will certainly be more.
Boeing’s largest supplier, Spirit AirSystems, announced on January 10 that it will fire 2,800 employees in Wichita, Kansas. The company has been producing airframes and some parts for Max series models. Next, Spirit’s shutdown may be longer than Boeing’s, as it has continued to produce 52 airframes per month since March 2019, exceeding Boeing’s needs.
Moody’s, a credit rating agency, says at least seven other Boeing suppliers have relied on the 737 Max business for more than 10% of their total revenue. In particular, Spirit AirSystems Company, the revenue from the 737 Max business accounted for 50% of its total revenue, and the shutdown caused its bonds to be downgraded to junk bonds.
CNN said that the suspension of the 737 Max may cause the US’s gross domestic product (GDP) to halve in the first quarter of this year.
The 737 Max, which has already been sold, also stays on the ground, and the go-around is postponed again. Boeing said regulators are not expected to approve a go-around until June or July of this year. Following the announcement, the aircraft manufacturer’s stock fell sharply along with the stock of the airline that bought the 737 Max aircraft.
In October last year, after interviewing several major US airlines, CNBC found that in less than a year, airlines had missed nearly $ 1 billion in revenue due to grounding.
In the past year, Boeing received new aircraft orders at a 10-year low, and its stock has fallen by more than 10%. Former CEO Dennis Muilenburg in the last three months of last year has successively abandoned his chairmanship, performance rewards and CEO positions.
Boeing said in a press release that the company’s board of directors decided to fire Millenberg, in part because customers and regulators no longer trust the company’s decisions.
Wall Street expects that the adverse effects of the crash will continue. Bank of America even estimates that Boeing will eventually pay up to $ 20 billion for the grounding crisis.
In July of last year, Boeing issued a report to the affected airlines and customers about the grounding incident.Compensated $ 5.6 billion in pre-tax expenses. But BofA Merrill Lynch analyst Epstein believes that If the 737 Max can go around in June or July, after deducting the settlement of the victims ’families, the total compensation for the final grounding Gold can reach $ 20 billion, equivalent to 40% of Boeing’s Max series aircraft profit last year.
Last week, it was reported that Boeing was in talks with the bank and hoped to obtain a loan of $ 10 billion or more during this period.
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