Boeing issued a statement today which indicates plans to downwardly adjust the existing monthly 737 aircraft production schedule, which will now impact this aircraft’s production supply network.

According to this statement, the monthly schedule will be reduced by roughly 20 percent over the next several weeks.  That implies that the current production schedule of 52 aircraft per month will be temporarily be reduced to 42 aircraft per month. Boeing 737 production line

Boeing’s statement reads in-part:

As we continue to work through these steps, we’re adjusting the 737-production system temporarily to accommodate the pause in MAX deliveries, allowing us to prioritize additional resources to focus on software certification and returning the MAX to flight. We have decided to temporarily move from a production rate of 52 airplanes per month to 42 airplanes per month starting in mid-April.

The statement indicates that this new modified monthly production plan will allow the company to maintain current production employment levels at the Renton facility. Boeing further commits to work directly with existing suppliers on their production plans to minimize operational disruption and financial impact related to the downward production rate change.

Boeing’s CEO additionally indicates that he has requested the company’s Board of Directors to establish a committee to review existing company-wide policies and processes for the design and development of airplanes.  The committee will reportedly confirm the effectiveness of policies and processes for assuring the highest level of safety on the 737-MAX program, as well as our other airplane programs, and recommend any needed improvements.

Supply Network Implications

Our Supply Chain Matters ongoing perspectives related to the 737 MAX global grounding have previously hinted to potential supply network impacts, depending on the length of this crisis.

Today’s announcement adds more definitive information and an indication that the grounding may indeed extend for several additional weeks or months as Boeing, the FAA, and multiple global air safety regulators mutually agree that software and any prescribed hardware component fixes, or additional pilot  training are adequately addressed.

According to a published report by The Wall Street Journal, this afternoon, the adjusted plan overrides the previous plan to boost monthly production levels to 57 per month by the summer, with the implication being a potential impact to the overall 2019 delivery commitment of 600 aircraft made at the beginning of this year.

Boeing has not acknowledged any annual aircraft delivery impacts thus far, and we anticipate that will likely come later as company executives definitively assess the overall timelines of fixes, global regulatory approval processes, and the expected monetary costs to Boeing.

There is only so much available real estate to temporarily store and maintain completed aircraft. We speculate that the aircraft manufacturer may additional explore any options to accelerate deliveries of other aircraft such as the 787 Dreamliner to potentially offset 737 delivery shortfalls.

What is becoming more apparent is that Boeing is now fully engaged into resolving this crisis and into all means to restore confidence in the safety of the 737 MAX aircraft.

 

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