Boeing’s woes with the 737 Max have caused a ripple effect of financial troubles throughout the industry.
Rabat – Aerospace giant Boeing announced on Wednesday that it may have to halt production of its 737 Max planes completely after massive financial losses.
The grounding of all 371 of Boeing’s 737 Max planes was ordered after the Federal Aviation Administration (FAA) found evidence at the scene of a fatal Ethiopian Airlines crash which killed 157 people.
Five months earlier, 189 people were also killed when a Boeing 737 Max operated by Lion Air nosedived just minutes after taking off. Both accidents were caused by the malfunctioning of a new automated system in Boeing.
Since the devastating Ethiopian Airlines crash, Boeing has been working on fixing several issues identified by investigators and is still waiting for approval from regulators for the planes to take to the skies again.
Production of the 737 Max has been reduced from 52 to 42 aircraft per month, said Boeing’s CEO, Dennis Muilenburg.
A ripple effect of financial loss throughout the aerospace industry
As a result of the grounding, the company announced its largest-ever quarterly loss, to the tune of $3.4 billion.
“We might need to consider possible further rate reductions or other options including a temporary shutdown of the Max production,” Muilenburg said during a conference call with investors on Wednesday.
The grounding and the prospective halt in production of the plane have a ripple effect that touches much further than just Boeing, due to their influential role in the economy and supply chain.
Airlines that carry the 737 Max have had to cancel thousands of flights, causing a significant dip in revenue.
The Irish low-cost airline, Ryanair, announced this month that it has to scale back expansion plans because the Max 737 planes it ordered were delayed.
Suppliers are also heavily affected. Spirit Aerosystems, the largest supplier for the Max 737, has already cut hours and pay for 4,000 workers and will see even further losses if production is halted.
“A defining moment for Boeing”
Muilenburg is putting on a brave face and remains confident that the planes will be approved to take to the skies again by October this year.
“These are challenging times, first and foremost, for the families and loved ones who are affected by these recent events, and also for our dedicated people, who work tirelessly to deliver on our mission to connect, protect, explore and inspire the world, all with a relentless focus on quality and safety and doing so with the utmost integrity,” he said in a statement.
“This is a defining moment for Boeing and we’re committed to coming through this challenging time better and stronger as a company.”
He also reassured investors that it has nearly $10 billion in cash and securities to help weather the storm, although it has already burned through $1 billion.
“I want to personally thank everyone who continues to be our partner in this journey; from our airline customers and their pilots, flight attendants and others who have been impacted by these groundings, representatives from all levels of government who share our commitment to safety for the flying public and everyone in the aviation community impacted by these events,” he said.
“We are grateful for your support and we will continue striving to earn and re-earn your trust,” the statement concluded.