Boeing Co. will soon learn whether the financial fallout from the global grounding of its best-selling jetliner will be a brief jolt -- or a much more painful ordeal that would have repercussions for suppliers and the U.S. economy.
Production of the 737 Max has continued at full tilt even though regulators grounded the single-aisle jet following a March 10 crash, the model’s second fatal accident in five months. Subcontractors have even begun to speed up the manufacturing pace for the 600,000 parts that go into each one of the single-aisle workhorses, Boeing’s largest source of profit.
For now, the company and its supplier base are sticking to a carefully orchestrated schedule, which predates the disasters, to raise monthly output to 57 jets by midyear. That’s about 10 percent higher than the current factory tempo, which is already a record. But if regulators take their time in certifying the Max’s return to the skies, Boeing would be forced to stash hundreds of factory-fresh jets in airports across the Western U.S.
“If they can’t sell these things for six months, they’re going to have 300 or more airplanes parked,” said Stephen Perry, co-founder of Janes Capital Partners, a boutique investment bank that specializes in aerospace deals. “The working capital tied up in that is quite mesmerizing.”
About 16 Max jets are already stored at Paine Field, adjacent to a Boeing factory north of Seattle, while another five sit at Boeing Field to the city’s south, according to 737 production blogger Chris Edwards. Airports from Moses Lake, Washington, to Victorville, in California’s Mojave desert, are preparing to take in the Boeing aircraft.
“We continue to build 737 Max airplanes, while assessing how the situation, including potential capacity constraints, will impact our production system,” Paul Bergman, a Boeing spokesman, said by email. (end of excerpt)
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