Boeing Will Temporarily Stop Making Its 737 Max Jetliners

Dec 17, 2019
Originally published on December 17, 2019 11:29 am
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DAVID GREENE, HOST:

Boeing is going to temporarily stop making its 737 Max airplanes. This decision comes nine months after regulators around the world banned the jets from flying, following two crashes that killed nearly 350 people. Despite being grounded, Boeing had continued cranking the planes out of its factory near Seattle anyway. But that is going to change next month. David Schaper covers aviation for NPR. He joins us from Chicago. Hi, David.

DAVID SCHAPER, BYLINE: Good morning, David.

GREENE: So why this decision from Boeing, and why now?

SCHAPER: Well, you know, Boeing is facing a couple of hard realities. One is that the head of the FAA last week told Boeing's CEO, Dennis Muilenburg, in no uncertain terms, to just stop predicting that the FAA would approve the return of the Max to service imminently. It's just - it's not happening. Maybe it's an effort to show an independent streak that the agency - after the agency was accused of being too cozy with the company. But FAA administrator Stephen Dickson told Muilenburg that the FAA sets the timeline, not Boeing. And the agency safety experts will take all the time they need to get its analysis and testing of Boeing's fixes for the plane done right, and won't rush the plane into a return to service. I'm hearing that means that the plane will likely remain grounded until at least February or March. And it now appears Boeing's getting - got the message.

GREENE: Well, how much of it also might be the company just realizing how much money they were losing if they were continuing to make these planes and not selling them?

SCHAPER: Yeah, that's the second hard reality Boeing is facing. They've been - they're burning through cash at a significant rate - according to some estimates, about $2 billion a month. The company did slow production a little bit back in April, reducing the number of planes produced from 52 a month to 42. But now it has about 400 finished Max jets just sitting in storage. It cannot deliver them to customers and cannot get final payment. Richard Aboulafia is an aerospace industry analyst for the Teal Group.

RICHARD ABOULAFIA: It's been really painful for Boeing. They've been maintaining production, paying suppliers to build 52 per month, while they build at 42 per month and not bringing in any revenue. This is very painful from a balance sheet perspective.

SCHAPER: You know, it's important to note, David, just how big of a deal this is for Boeing. The 737 Max is the best-selling commercial airliner in the company's history. It had 5,000 orders for the planes before it was grounded. And it's a very profitable - was, anyway - a very profitable product. And a huge part of the company's future is tied to this plane.

GREENE: OK. Painful for Boeing - what about the people who work there, David? I mean, this plane is assembled at a plant in Renton, Wash., outside Seattle. Twelve thousand people work there. How are they going to be hit by this?

SCHAPER: Well, Boeing is saying that there will be no furloughs and no employee layoffs, at least at this time. The statement announcing the decision to suspend production says the company plans to have affected workers continue either 737-related work or be temporarily assigned to other Boeing factories in the area. But there still is a fair amount of anxiety in and around the plant. We had Ashley Gross of our member station KNKX ask around about the impact. She talked with Veronica Medina, whose family owns a Mexican restaurant called Torero's in a strip mall called The Landing, right across the street from the huge Boeing plant.

VERONICA MEDINA: Well, obviously, being right here at The Landing, it's very significant. We get a lot of lunch crowds. We get, you know - Renton in general very dependent on Boeing's well-being.

SCHAPER: Medina says even if the employees aren't laid off, if they aren't going in and out of that factory across the street, her business may suffer.

MEDINA: Well, obviously, it's going to be a hit. I don't know how big, but I think as a city - as a business owner, I think we will feel it.

GREENE: David, what about the economy and what the economy is going to feel here? I mean, you've got to have the supply chain that that feeds this big factory. I mean, there could be a lot of sectors, a lot of companies that could be affected.

SCHAPER: Yeah. I mean, there's a lot of companies that could feel this more deeply - not so much in Seattle but in places like Wichita, Kan., where supplier Spirit AeroSystems makes the fuselage and other parts for the 737 Max. And, you know, they're scattered not just around the country but around the world, these suppliers. Boeing may do something to help soften the blow for them, but many of these companies may be forced to furlough or lay off workers themselves. It's just not clear how significant that impact may be.

GREENE: NPR's David Schaper in Chicago. Thanks, David.

SCHAPER: My pleasure, David. Transcript provided by NPR, Copyright NPR.