Boeing weighs suspending or reducing 737MAX production

With the FAA strenuously resisting Boeing’s campaign to get the MAX airborne again on a timetable that would suit the company, Boeing seem finally to be facing the fact that it will be February before the 737MAX is re-certified.

Depending on what the final specification for the recertification is, and the work required, Boeing will then have to weigh how it gets some 380 delivered units airborne – and individually signed off by the FAA, EASA and whichever other authority has to give approval. Then it has to get the nearly 500 undelivered aircraft up to spec and certified individually by the FAA and the other authorities.

Boeing has been financially carrying the construction of new aircraft for nearly a year – and the cost is now weighing on it. On top of that every single aircraft it builds is adding another to the list of approvals and certifications and potentially delaying its delivery- and payment for it.

Slowing production down has its advantages, cut the rate and the cost to finance construction is reduced, fewer aircraft (its around 1.5 a day at present) need rectification post production.

However fully suspending production has more practical rewards. It stops the company shedding cash, it zeros production so that when restarted the new approved specification would be introduced not requiring individual FAA sign off. It would allow production to ramp up slowly again, while resources were committed to clearing the backlog of parked aircraft.

The downside is mostly for the workforce who’d be temporarily laid off on partial pay and the suppliers who will need to slow production too.

There’s no perfect way of dealing with it, and the airlines will be hoping mad about more delays.

RyanAir for example says it will have cost them $100m in lost revenue and other airlines are reporting figures bigger than that as compensation from Boeing.