Boeing to suspend 737 Max jet output amid regulatory delays

Boeing said on Monday it will temporarily suspend production of its 737 Max jet in January because it's unclear when the plane will be recertified for commercial service.

The aircraft maker doesn't get paid until the planes are delivered to the purchaser and it must pay to store the aircraft, creating a deepening drag on the company's finances.

"We believe this decision is least disruptive to maintaining long-term production system and supply chain health," Boeing said in a statement.

"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 toward return to service milestones and make determinations about resuming production and deliveries accordingly."

Boeing said it will seek to limit the disruption caused by the temporary halt in production.

"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 company said. "As we have throughout the 737 Max grounding, we will keep our customers, employees, and supply chain top of mind as we continue to assess appropriate actions. This will include efforts to sustain the gains in production system and supply chain quality and health made over the last many months."

Boeing vowed to continue to work with the US Federal Aviation Administration, or FAA to recertify the plane and safely return it to service.

In April, Boeing cut production of the Max to 42 planes a month from 52, a reduction of about 20 percent. Boeing had hoped to increase production to 57 a month by the end of 2020. Meanwhile, newly completed planes join previously grounded aircraft in storage, further driving up costs.

On Monday, Boeing's stock price fell $14.67, or 4.29 percent, to close at $327 in trading on the New York Stock Exchange. The 52-week range is $292.47 to $446.01.

In an earnings call with investors in July, a Boeing representative said: "Should our estimate of the anticipated return to service change, we might need to consider possible further rate reductions or other options, including a temporary shutdown of the Max production."

In October 2018, a Max jet crashed in Indonesia, and in March 2019, another Max went down in Ethiopia. The two crashes killed all 346 passengers and crew onboard. All Max aircraft have been grounded since March 2019.

Investigators believe that in both instances the plane's automated anti-stall device, called the Maneuvering Characteristics Augmentation System, erroneously pointed the nose of the planes down to avoid a midair stall and into a fatal plunge.

The FAA has consistently said it has no deadline for recertification.

At a hearing last week before the House of Representatives' Transportation Committee, FAA Administrator Steve Dickson, a former US Air Force and commercial pilot, testified: "I'm not going to sign off on this plane until I fly it myself".

Boeing had hoped the plane would be cleared to return to service this month, but now it appears the plane won't return to the sky until March at the earliest.