Boeing has confirmed that it will suspend production of the 737 MAX starting in January after re-certification of the troubled plane moved into 2020.
The company said it did not “at this time” expect lay-offs or furloughs as a result of the decision to suspend the production of the 737 MAX, which has been grounded since March after two fatal accidents linked to flight control software.
Boeing has since modified the software, known as MCAS, and flight training but needs to get regulators around the world to sign off on the changes before the plane can fly again.
READ: American delays MAX return to service until April.
“Throughout the grounding of the 737 MAX, Boeing has continued to build new airplanes and there are now approximately 400 airplanes in storage,” the company said in a statement.
“We have previously stated that 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.
“We believe this decision 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.
“We will continue to assess our progress towards return to service milestones and make determinations about resuming production and deliveries accordingly.
“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.”
The unprecedented move will have an impact throughout the US aerospace industry as suppliers also grapple with the decision.
Boeing said it would provide financial information regarding the suspension with its fourth-quarter earnings release in late January.
Until recently, the US manufacturer had maintained what proved to be an overly optimistic stance that the aircraft could be at least be re-certified in the US by the end of this year.
Those hopes were dashed when the head of the US Federal Aviation Administration, Steve Dickson, confirmed what many had already guessed: that the process would extend into 2020
Some observers now believe the plane may not return to the skies until towards the end of the first quarter of next year and American Airlines has removed it from its schedule until April.
Boeing reiterated in its latest statement that returning the aircraft to service was its top priority.
“We know that the process of approving the 737 MAX’s return to service, and of determining appropriate training requirements, must be extraordinarily thorough and robust, to ensure that our regulators, customers, and the flying public have confidence in the 737 MAX updates,” it said.
“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.”
Despite the MAX troubles and a dip in the Boeing share price, shareholders are still receiving a dividend.
The company on Monday declared a regular quarterly dividend of $US2.055 per share payable March 6, 2020, for shareholders of record on February 14, 2020.
