Boeing MAX production will restart, build slowly

By Scott Hamilton

Jan. 29, 2020, © Leeham News: Restarting production of the Boeing 737 MAX assembly lines will be slow, methodical and paced to avoid adding to inventory of about 400 airplanes in storage.

Boeing 737 factory, Renton (WA). Source: Boeing.

This was one of the take-aways from Boeing’s earnings call today. Boeing announced its first loss since 1997. This is when production of the 737 and 747 lines were shut down when rates outpaced the ability of the supply system to keep up.

Greg Smith, EVP, CFO and head of Boeing’s strategy, revealed the production restart in broad terms.

Timing and ramp up

Smith declined to provide a specific timeline for restarting production. CEO David Calhoun previously indicated that Boeing planned to restart production “a couple of months” ahead of recertification of the MAX. Boeing previously indicated it expects certification mid-year. The Federal Aviation Administration called this projection conservative. These statements imply restarting production in April.

Calhoun, on the earnings call today, said financial reporting requirements and customer notices led Boeing to project the mid-summer date. He emphasized that regulators still control the process.

Smith said the assembly positions at the Renton plant, where the 737 is produced, are empty. Restarting production means loading position No. 1 and going from there.

Boeing does not want to add to the inventory of stored airplanes, Smith said. Production plans call for coordinating assembly with deliveries. This suggests a one-for-one basis. However, Smith didn’t explicitly say this.

It’s unclear how this can be achieved if certification trails restarting production. Deliveries can’t take place until the MAX is recertified.

Clearing inventory

Calhoun said it will take 1 ½ years to clear inventory. This averages about 22 airplanes a month.

The pace is expected to begin slowly and build over time.

Based on these factors, LNA estimates Boeing might deliver 180 MAXes from storage by year-end. This therefore infers Boeing may produce an equal number of MAXes over the same period.

25 Comments on “Boeing MAX production will restart, build slowly

  1. Boeing is now confident enough on recertification that they are going to build MAXs that are ‘fixed’ and ready to fly and by the time the first airplane off the restarted line is ready to deliver, MAX will be recertified.

    With the months of bad news and public beating, I expect this to be the safest commercial aircraft of all time. Anything less jeopardizes the company.

    Now Boeing only has to keep all of the following hand grenades from exploding and they’ll be fine: the T-7 underbid, the MQ-25 underbid, the overbid but underperforming Commercial crew astronaut program, the KC-46 persistent technical problems, termination of the 747 line, and certification on the 777x.

    • The MAX can’t be the safest ever. Concorde crashed only once. MAX is already up to 2.

      • Statistically, the Concorde was then most unsafe passenger aircraft; only 20 were produced with 14 entering service. The one crash (balanced with the number produced) made it so.

      • one out of 20 total built. that is a 5% crash rate over the service life.

        there have been 10,571 737’s built (and ~200 MAXs were in service at the time of the second crash)

        how many Class A mishaps in 737 history? ~213 for about a 2% crash rate vs service life for all generations of 737.

        there are lies, damn lies and statistics….

    • “With the months of bad news and public beating, I expect this to be the safest commercial aircraft of all time. Anything less jeopardizes the company.:”

      No, lets not mix hope & reality. The 737MAX is meeting flight safety & emergency system requirements that would not be approved for newer aircraft. It extensive used grandfathered requirements to safe costs, time, training and keep commonality with old 737s.

      Boeing is now fixing to meet safety requirements, while others are reviewing the robustness of those requirements, if the FAA didn’t exempt, change them too much and if Boeing didn’t pressure congress FAA to go soft on applying them for the 737MAX. And 777x.

      They are even reviewing old 737NG accidents to see if the full truth ended up on or under the table.

      So there is no reason to expect the 737 safest commercial aircraft of all time. Contrary. Already now, other aircraft are statistically significantly safer.

      • My points are:
        First: the 737 and Boeing can’t afford a crash that is the fault of a design flaw or assembly defect regardless of safety standards. Regulators now have a standard of imposing $18B in costs prior to understanding the causes of two coincidental crashes–not limiting the flight envelope or imposing additional inspection requirements. Whether or not that was the right decision, it is now the standard applied to the 737 and Boeing cannot afford another class A mishap.

        Second: Boeing has been relying on short- and long-term future commercial aircraft profits to make up for short-term losses in its military bids. Boeing underbid those contracts in order to score long-term profits. There is also ample concern that Boeing is not adequately investing in manufacturing and engineering in their new programs as the commercial space capsule, 737MAX, and KC-46 demonstrate. Those low-ball bids are now exposed as being based on bad assumptions and Boeing needs them to be at least revenue neutral (especially since Boeing Defense booked as 56% profit increase this quarter to minimize total losses).

        Boeing is not out of the woods yet just by restarting production and obtaining 737 re-certification.

      • So what is this “magix fix”? A black box patch and training, doesn’t look like a long term solution to me.

        How long will it take to get all the delivered (“in service”) aircraft back in the air? Also, seems the MAX10 EIS timeline will really be extended now?

  2. Now, we have an inventory of 400 aircraft. With the restart of production one-for-one basis, the inventory will be 400 aircrafts in dec 2020, 2021 …

    • I’m not getting this logic, nor the logic of if 180 airplanes are taken out of storage than 180 airplanes will be produced.

      I would expect new airplanes to be delivered directly to the costumers.
      By that logic, if the customer base can receive 600 airplanes over the remaining year, than production could be 600-180=420 without adding to inventory. Right?

      • @Bob: You overlook statements it will be slow and deliberate ramp up. You can’t turn a key and be back to rate 47 from zero. Rate 47 would be what’s needed, each month, over nine months to get to 420.

        • Understood. 600 was a (poor) random picked number. Is it coincidence that the production rate of 180 will be equal to the rate of inventory deliveries (also 180), or a deliberate strategy?

  3. The article says Station 1 on the 737 line is empty, so if Boeing takes two months to build the first aircraft, it will finished about when the first delivery can take place.
    Boeing apparently intends to deliver about 20+ aircraft per month more that they build. Since they intended to deliver about 50 per month, that suggests a surge delivery rate of about 70 aircraft per month.
    Boeing did not release any employees; they should be able to build to a near full production rate fairly quickly, IF they are not limited by, say, painting capacity and IF their suppliers can support.
    Spirit produced about 100 additional ship-sets before stopping production, so they should have a few months to build up their production rate before they become a limiting factor. No idea about other suppliers.

    • There is quite a few fuselages at Witchita and presumably wings and tails elsewhere waiting to go to the FAL at Renton. Production by Renton doesn’t take 2 months, I don’t know the period but it would be more like 2 weeks or less in final assembly

      • Plus paint; customer supplied interior and equipment; and flight testing. Two months from rail car to delivery doesn’t seem all that unreasonable as a guesstimate.

  4. I think flattening the delivery rate on stored airplanes (ie to get the 22 per month) coupled with a “one-for-one” incorrectly characterises the process as clearly a 1 from store, 1 fresh approach like his would see production still running at 22 when the last stored airplane is delivered.

    If this was all in Boeing’s sphere of influence then the shape of the actual delivered from storage curve surely would depend on customer demand (timing for travel season), any counterbalancing Boeing weight if needed to get reluctant earlier than desired deliveries, and the need to balance with the production ramp up to avoid new storage. But, as far as possible be heavily weighted front end. Unfortunately of course for Boeing, there is the recently reported rediscovery of the FAA’s backbone in the vicinity of the stored MAXs.

  5. I still think the developing world will cancel their contracts without penalty and buy the MC-21 or C919. I sure they will get a good deal. A view that Boeing is best doesn’t resonate with anybody anymore.

    Equally, we are told that the FAA will certify the MAX in a few months. If the FAA do certify, will other regulators follow quickly or will it drag on into next year or forever?

    Equally, if the MAX is certified, we now know that pilots will need training. Last year there were no Level D simulators. That’s why an NG Level D simulator was used to test manual trim. The yo-yo manuever. Customers willing to take the MAX will need to stump up the cost of training, time and money, before they can put the MAX into revenue service.

    Equally, if the MAX is certified, will Boeing get $50 million for a MAX. No. Customers willing to take the MAX will press for a bargain basement price. The consequence: Revenue and profit will be drastically suppressed

    So for me, production will be all about demand, certification, training and price. We will see.

    I do note that the FAA have now given some encouragement to Boeing. What a difference a month makes. Last month a broadside, this month encouragement. Still waiting on EASA and other regulators for positive comment.

    In short, I don’t believe in this US centric world. The world will have their say. And it just might not be positive.

    • The encouragement from the FAA reflects the fact that Boeing is no longer pushing for RTS. Just as the broadside was caused by pushing for it. This changed the dynamics of the relationship.

      Calhoun signaled this when he shifted RTS expectations to mid-summer. That removed public pressure from the regulators, and the perception that they weren’t moving fast enough. It also put the FAA on the opposite foot, they then called airlines to say that RTS might occur sooner. So there was a role reversal, FAA now signaling RTS before Boeing had expected, instead of the reverse that had occurred all last year. It was a smart move.

      I don’t think actual progress has changed that much in a month. Progress has been pretty steady all along, but the process is complex and it needs to be very thorough in order to be accepted outside the US.

      As far as the mandated pilot training, that is a great thing for pilots around the world. They will receive training that their airlines might not have provided otherwise. It should help to level the field in terms of skill. Airlines may ask for compensation for that as well, or Boeing may assist them with access to flight simulators. I think Boeing now properly sees training as a benefit rather than a liability. The pilot testing helped them understand that.

      • I don’t know how to read minds. So I bow to you.

        Please start your sentence with ‘in my opinion’ or something similar. For example, I started my post with ‘I still think…’

  6. “”the developing world will cancel their contracts without penalty””

    Boeing should pay compensations because Boeing couldn’t keep promisses.

  7. “”we are told that the FAA will certify the MAX in a few months. If the FAA do certify, will other regulators follow quickly or will it drag on into next year or forever?””

    Seems Dickson changed his mind and the FAA will certify alone. At some point Boeing can’t hide the MAX behavior anymore. It should also be sure that some regulators are stricter than EASA. Not much will change if the MAX can only fly in US.

    • Leon, I don’t think anything has changed with regard to regulator agreement, or that the FAA will go it alone. I don’t see how that could ever work, when you have international flights. EASA has been quiet as they are focused on running their own tests. The Seattle Times reported that the software audit was complete.

      I think the FAA is anticipating that the testing will go well, based on their internal assessment. If it doesn’t, then I’m sure they will change their position to remain unified with EASA, and other regulators. It can’t really be any other way.

Leave a Reply

Your email address will not be published.