Despite a robust order sheet and 400 newly built 737 Max aircraft in storage, the Renton, WA-based airline manufacturer announced yesterday that it is suspending further production.
Company management deemed the suspension to be the most efficient and effective path for Boeing, saying in a statement: “This decision is least disruptive to maintaining long-term production system and supply chain health. This decision is driven by a number of factors, including the extension of certification into 2020, the uncertainty about the timing and conditions of return to service and global training approvals, and the importance of ensuring that we can prioritize the delivery of stored aircraft.”
The decision is likely to affect the operations and bottom lines of airline companies who have contracted with Boeing for their Max model deliverables.
According to Bloomberg, Asian carriers will be the most affected by this halt in production, as they have the biggest number of 737 Maxes on order, accounting for at least 26% of the total unfilled deliveries at the end of last month, according to Boeing. Boeing’s best-selling aircraft has been grounded globally since March after two fatal crashes and Boeing reduced output for the favored, but embattled, plane to 42 per month. The cascading effects of the suspension may cause some cash-strapped carriers to shut operations.
At this time Boeing has not announced intentions for layoffs and is rather reassigning Max 8 personnel to other projects.