Boeing reported its largest ever quarterly loss ($2.9Bn) and CEO Dennis Muilenburg raised the possibility of slowing or even stopping Max production.
The company lost $2.9bn in the three months to the end of June, compared to a profit of $2.2bn for the same period last year
www.theguardian.com
At some point they'll have to stop production just due to the space required to keep every finished aircraft sitting there. If they've been producing at 42 aircraft a month since the grounding in mid March, I make that about 180-190 aircraft looking for a piece of ramp to sit on, plus however many were already sitting there waiting for delivery. If the aircraft remains grounded until January, as the WSJ predicted, then that would be another 210-50 aircraft on top of that. That's getting towards a full year's production sitting idle.
Even if everything goes smoothly, Boeing can't simply fly those aircraft out the day the grounding is lifted, they need customer checkout flights, and then any remedial actions taken before handover. I think the highest monthly Max deliveries Boeing has previously demonstrated was 61 a month after the engine delivery issues. Worse, depending on how Boeing's been handling the fix and what comes out of the latest problems reported, they may need modifications to fit the finalised redesigned MCAS systems. It's also going to hit the 737 completion centre in Zhoushan with a pile of Chinese Max orders that have been complete but for interiors all descending at once. Unless Boeing can deliver substantially more than 60 aircraft a month, my back of the envelope calculation is that it will take a year and a half to clear the backlog, and several months beyond that if they go ahead with the increase in production rate to 57 a month.
So the whole problem doesn't go away with the lifting of the grounding, clearing that backlog will take a considerable time, potentially well into 2021. And if they're forced to shut down production then it gets worse; the completed backlog stops growing, but the unbuilt aircraft start accruing increasing delays, and that lost time can't be claimed back. At this point I don't think any Max customer will be getting any aircraft to the originally agreed schedule, no matter how far down the line delivery is.
But if Boeing do stop production, then they're likely to start laying off employees, which will cause disruption and ill-feeling in the workforce, and the same will go for all their subcontractors, who are set up for just-in-time delivery of parts for 42 aircraft a month. Boeing can't keep taking parts, one of the features of just-in-time delivery is you don't need the warehouse space for keeping parts, so a stop-work for Boeing is a stop-work for everyone, And if the money isn't coming in, some of those companies might find themselves in a vulnerable financial position, and justifiably aggrieved with Boeing who have been hammering them to increase their capacity and delivery rates for several years.
It's a mess.