Boeing

Boeing will suspend the production of 737 MAX planes beginning January 2020. The suspension follows the grounding of Boeing 737 MAX passenger airliner after two new airplanes belonging to Lion Air and Ethiopian Airlines crashed within five months, killing all 346 people aboard.

According to a statement released by Boeing, they are in the process of approving the 737 MAX’s return to service and determining appropriate training requirements, extraordinarily thorough and robust, to ensure that our regulators, customers, and the flying public have confidence in the 737 MAX updates.

Recently Boeing announced a $50 million compensation fund for the families of people killed in Boeing 737 Max plane crashes. The Fund officials in September said that they have started accepting applications, with a deadline of December 31 for submitting claims. Administrators of the fund include Kenneth Feinberg, who oversaw compensation for victims of the September 11, 2001, terror attacks.

“As we have previously said, the FAA and global regulatory authorities determine the timeline for certification and return to service. We remain fully committed to supporting this process. It is our duty to ensure that every requirement is fulfilled, and every question from our regulators answered.” Reads in part of the statement.

Throughout the grounding of the 737 MAX, Boeing has continued to build new airplanes and there are now approximately 400 airplanes in storage.

“We would continually evaluate our production plans should the MAX grounding continue longer than we expected. As a result of this ongoing evaluation, we have decided to prioritize the delivery of stored aircraft and temporarily suspend production on the 737 program beginning next month.” Reads in part of the statement.

The company stated that the suspension 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.

“During this time, it is our plan that affected employees will continue 737-related work, or be temporarily assigned to other teams in Puget Sound. As we have throughout the 737 MAX grounding, we will keep our customers, employees, and supply chain top of mind as we continue to assess appropriate actions. This will include efforts to sustain the gains in production system and supply chain quality and health made over the last many months.”

They pledged to provide financial information regarding the production suspension in connection with our 4Q19 earnings release in late January.