Boeing hopes to significantly increase production of its popular Max jets in 2024. But less than a month into the year, the company is working to reassure airline customers that it can still deliver on its promises.
That’s because the Federal Aviation Administration said on Wednesday it would limit the planemaker’s output until it is confident about Boeing’s quality control practices. On January 5, a panel blew off the fuselage of a Boeing 737 Max 9 shortly after takeoff. terrible passenger The pilot of an Alaska Airlines flight was forced to make an emergency landing at Portland International Airport in Oregon. The Federal Aviation Administration grounded some Max 9 aircraft almost immediately.
Since then, details have emerged about the plane’s production at Boeing’s Renton, Wash., plant, intensifying scrutiny of the company’s quality controls. Open and reinstall the panel The aircraft was delivered to Alaska Airlines about a month ago.
The directive is another setback for Boeing, which had planned to increase production of the Max aircraft family from about 400 last year to more than 500 this year. The company also plans to add another assembly line at a plant in Everett, Washington. Major Boeing production center north of Seattle.
As part of Wednesday’s statement, the FAA also approved inspection and maintenance procedures for the Max 9. Airlines can return aircraft to service after following these instructions. United Airlines said Thursday it could resume flying some of its planes Friday.
The move is another potential blow to airlines. While demand for flights has picked up sharply following the easing of pandemic lockdowns and travel restrictions, airlines have failed to take full advantage of the demand. These companies are unable to purchase enough aircraft or hire enough pilots, flight attendants and other workers needed to operate flights. Soaring jet fuel costs following Russia’s invasion of Ukraine also hurt profits.
Many airline executives are now assessing how the FAA’s order will impact their fleet plans for the next decade or more.
When they are launched, the narrow-body, fuel-efficient planes should help manufacturers compete with Airbus, Far ahead of Boeing But the Max series has been plagued by mechanical and safety issues, including two crashes in 2018 and 2019 that killed nearly 350 people and grounded the Max 8 for nearly two years.
In a statement on Wednesday, the FAA did not say how soon it would lift the production pause, but instead set out conditions for Boeing that must be met before doing so and said “Boeing will not resume normal operations.”
Mike Whitaker, head of the agency, said: “We will not agree to any Boeing request to expand production or approve additional 737 Max production lines until we resolve the quality control issues discovered during this process.”
Boeing shares fell about 6% on Thursday and have fallen about 19% since January 5.
In 2023, Boeing will produce an average of about 32 737 aircraft per month, and planned to increase to 38 aircraft by the end of last year. The company originally planned to further increase production to 42 aircraft per month in 2024, a year-on-year increase of more than 100 aircraft per year, and approximately 50 aircraft per month by 2025.Before the Max 8 was grounded in 2019, Boeing has been producing Maximum 52 aircraft per month.
Many airlines said they welcomed the FAA’s decision to limit Boeing’s production until regulators are convinced the company has improved quality and addressed safety concerns. But some airline executives are also moving quickly to realign their fleet plans because they assume their planes will now be months, and in some cases years, later than expected.
Alaska Airlines, which has 231 Boeing 737 aircraft, was scheduled to add 23 Max jets to its fleet in 2024, but said on Thursday it expected “many of those aircraft to be delayed.”
“We have the appropriate number of aircraft to execute our current flight schedule and get our guests where they want to go,” the company said in a statement. “We are still working to understand the aircraft restrictions recently announced by the FAA. impact on Boeing’s production.”
Southwest, which has more than 500 Max jets on its waiting list as of October, said it will “reduce the number of Boeing 737 Max aircraft delivered by the manufacturer” and no longer expects any Max 7 jets, while the Federal Aviation Administration ( The FAA has not disclosed this situation. Certification not yet available for 2024.
However, some analysts said it was unclear how much impact the FAA’s order would have.
“The FAA’s restrictions on ramps may not matter, at least for the shift to 42, as investors have come to assume that 38 will take longer to drive stability and improve quality,” Deutsche Bank analysts said in a study. “Thursday’s explanation refers to the number of 737 Max aircraft produced by Boeing in a month.
At least one airline is confident the disruptions will not affect its orders from Boeing. European low-cost carrier Ryanair said in a statement that the manufacturer has “assured Ryanair that the grounding of the Max 9 will maintain, rather than increase, current volumes” and that monthly production will not further delay Ryanair’s plans for summer 2024 and 2025. Summer delivery.
While the FAA’s decision to limit production doesn’t help, Boeing is also struggling to increase production for another reason — the company and its suppliers can’t replace all of the workers who have been laid off, retired or quit during the pandemic. Christopher Raite, a senior analyst at research firm Third Bridge, said skilled workers have been hard-working and training them has taken longer. “The labor base just doesn’t exist.”
Boeing is producing two models of the Max planes, the Max 8 and Max 9, as well as two other versions, the Max 7 and Max 10, that are currently awaiting FAA approval before they can fly.
Even before the Alaska Airlines Max 9 incident on Jan. 5, airlines were limited in how much they could grow by adding flights or routes. In April, Willie Walsh, chairman of the International Air Transport Authority, said capacity reductions would continue until 2025 and possibly beyond.
Jonnathan Handshoe, an airline analyst at CFRA Research, said Boeing’s safety and production woes could add to the instability at airlines.
Hanshu said delays in new aircraft deliveries would mean airlines would spend more than expected on fuel as they would be forced to use older, less fuel-efficient aircraft they had hoped to scrap or sell. Mr Handshaw said supply chain issues, new labor agreement Give pilots, flight attendants, mechanics and other workers big pay raises.
In recent weeks, some airline chiefs have taken the unusual step of publicly criticizing Boeing for safety lapses and production delays. Aviation analyst Hubert Holland said airlines are trying to get better deals from Boeing to handle the large orders they have already placed.
“It’s common in contracts like this to have provisions that if major issues cause Boeing to be unable to fulfill the contract, it will face significant penalties and cancellation of the contract,” Holland said. “To some extent, the most recent public statements are about penalties and discounts to the final terms. part of the negotiation.”…”
In a conference call with analysts Thursday, Alaska Airlines CEO Ben Minicucci said the company’s partnership with Boeing is a key part of the airline’s future. The company has ordered 185 Max aircraft, and Mr. Minicucci noted that the company is pleased with its partnership with Boeing. Until recent events.
But the weeks-long grounding of the Max 9 planes and limits on Boeing production will hurt companies like Alaska. The company said it expects to lose $150 million from the FAA’s grounding alone, but it also expects that loss to be “recouped.” Minicucci said in a recent interview that he was angry about Boeing’s safety and production failures.
“We’re going to stop Boeing to make sure we get quality airplanes out of this plant,” Mr. Minicucci said.