Leeham News and Analysis
There's more to real news than a news release.
Boeing MAX production cut signals long grounding
- Airlines seeking interim aircraft leases of six months.
- At least one sees MAX grounding lasting until November.
- Impact to Boeing is already significant and growing.
- Impact on the NMA decision.
April 6, 2019 © Leeham News: Boeing’s decision Friday to reduce the production rate on the 737 MAX was a surprise in timing and scope.
This came so quickly and was steep, cutting production from 52 MAXes per month to 42. It comes on the heals that a second software problem was found, delaying submission of the MCAS software upgrade to the FAA for review and approval.
The production rate cut is effective in mid-April. This is lightning speed in this industry, where rate breaks, as changes are called, typically have 12-18 month lead times.
Boeing hasn’t announced what the second software problem is. LNA is told it is the interface between the MCAS upgrade and the Flight Control System, but specifics are lacking.
LNA interprets these combined events as indicative the MAX will be ground well past the Paris Air Show in June.
The impact to Boeing is going to be huge: customer compensation, deferred revenue, lost revenue, potentially canceled orders and potential lost orders in sales campaigns. The hit to the Boeing brand and impacts of multiple investigations won’t become clear for months to come.
A partial line-up of Boeing 737 MAX aircraft stored at Paine Field, Everett (WA). Photo by Jennifer Schuld.