General aviation

Boeing raises spectre of 737 Max production halt as crisis deepens

Boeing executives have raised the possibility of temporarily halting production of the Boeing 737 Max as uncertainties around the type’s return to service continue to dog the company and weigh on its finances.

The company has already recorded a $5.6 billion (U.S.) charge as a result of the type’s world-wide grounding following two fatal crashes. It has also reduced production of the world’s best-selling aircraft to 42 per month. New planes that roll off the line are being stored at various facilities in the United States, waiting until they can be delivered to airlines, including in Canada.

Company executives say they are working towards a Max return to service by the end of the year. But getting there is complicated, as Boeing works with regulators around the world.

During a conference call with analysts on Wednesday, executives said if the crisis drags on, they may be forced to stop production altogether.

“There is still uncertainty in the timeline,” said Boeing chief executive Dennis Muilenburg. “If any of the timeline assumptions change significantly, then we’ll have to evaluate different alternatives.”

Muilenburg said a shutdown is “Not something we want to do, but an alternative we have to prepare for.” He called returning the Max to service Boeing’s “top priority.”

Boeing hopes to deliver a software fix to the Federal Aviation Administration by the end of September, with possible recertification by the end of October. Investigators are concentrating on problems with a flight control software as a factor in the two fatal crashes.

Muilenburg said teams were in daily contact with regulators to get the proper documentation to the FAA. He said it remains possible that engineers and regulators may still uncover new problems. “It is an iterative process.”

Muilenburg said the company has prepared computer-based training for all its airline customers, while some may choose to have their pilots train in simulators before the fleet is back in the air.

The Max crisis has hit sales hard. Boeing reported that revenues were down 35% in the second quarter to less than $16 billion as the company lost $5.21 per share.

Muilenburg stressed, however, that when the Max does return to service, Boeing will be confident it’s the safest aircraft in the world.

Air Canada, Westjet, and Sunwing have turned to the Max to form the backbone of their narrow-body fleets in the years to come.

All of the uncertainty around the Max means the hit to the bottom line will likely drag on.

“It’s likely be multi-year financial outcomes,” said Greg Smith, Boeing’s Chief Financial Officer. “It’s obviously TBD at this point.”

Boeing said its order backlog stands at more than 5,500 airplanes, worth more than $390 billion.

Categories: General aviation, Safety