Boeing has halted production of the 737 Max in its Renton, Washington, facilities amid the aircraft’s continued grounding worldwide, uncertainty over when it will be recertified to fly, and other setbacks.
The company says it has no plans to lay off or furlough workers during the production shutdown, but the production gap has already sent shockwaves through the supply chain and will likely deliver a substantial blow to the nation’s gross domestic product.
Some industry analysts believe the Federal Aviation Administration (FAA) will certify the 737 Max in March while others predict Boeing will get the green light in April or May. American Airlines, United Airlines, and Southwest Airlines have all canceled 737 Max flights through early June, indicating that the delays could be even longer than some analysts expect.
The 737 Max was Boeing’s blockbuster aircraft before two catastrophic crashes exposed serious flaws in its design and operating system. In October 2018, Lion Air flight 610 crashed into the Java Sea in Indonesia, killing all 189 people aboard. Less than five months later, in March, Ethiopian Airlines flight 302 crashed in Ethiopia killing 157 people, including several prominent climate researchers.
In December, Boeing announced it would suspend 737 Max production, but the company didn’t say when until Jan. 20. Since the grounding, Boeing continued to produce the aircraft at a rate of 42 per month, slightly below its normal output.
But instead of delivering those planes to its customers and collecting on them, the company has parked them in lots in Washington and Texas.
Boeing had pushed for recertification of the aircraft by the end of 2019, but regulators assessing the safety of the 737 Max upgrades uncovered other problems unrelated to the MCAS software at the center of the crash investigations. The probe also turned up internal communications in which Boeing employees mocked and insulted FAA regulators and condemned the 737 Max itself, with at least two employees agreeing they would not allow their own families to fly on the planes.
When the FAA announced it wouldn’t re-certify the planes until sometime in 2020, Boeing announced its production shutdown plans a week later.
Although Boeing has retained its workers, production of the jets could still be painfully slow when it resumes. According to CNN Business, Boeing’s largest supplier, Spirit AeroSystems, earlier this month said it would lay off 2,800 workers (about half its company) in its Wichita, Kansas, facilities. The company produces the fuselages for the 737 Max and already has 100 of them ready and waiting.
Once AeroSystems restarts is 737 Max fuselage assembly lines, it may have to hire and train much of its workforce.
Several other suppliers have also laid off workers to cope with the Boeing crisis. According to CNN Business, at least seven other suppliers have more than 10% of their revenues tied to the 737 Max.
The layoffs have impacted AeroSystems’ crediting rating, which in turn prompted Moody’s to downgrade both the city of Wichita and Sedgewick County where it is located. Financial analysts predict the layoffs could lop half of 1% off the national GDP.
Once the FAA certifies the 737 Max for flight, it’s still unclear how aviation regulators in other countries will respond. It’s very possible that Boeing could face even further delays past mid-2020 in getting the planes off the ground outside the U.S., and 80% of the aircraft’s buyers are in foreign countries.
Beasley Allen lawyer Mike Andrews focuses much of his practice on aviation litigation and currently represents families of Ethiopian Airlines flight 302 victims. In addition to his Ethiopian Airlines crash clients, Mike has represented people seriously injured in a variety of aviation crashes, and the families of those killed in both civilian and military airplane crashes and helicopter crashes.