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Boeing’s Decision To Stop 737 MAX Production To Badly Hit Global Airline Routes, Delays Expected

Posted on January, 13 2020 by Blueway Limited

Boeing’s decision to temporarily halt the production of its 737 Max planes has left companies and travellers around the world in a lurch. The move is in response to the string of lawsuits and regulatory issues the company is facing.

Suppliers & partners bear the brunt of the problem

The people to experience the most impact of Boeing’s decision are its parts suppliers and commercial partners. The Boeing 737 MAX is the manufacturer’s most famous and most-purchased product. It is also an aircraft that benefits from the engineering prowess and specialization of multiple suppliers and assemblers.

Post-release of Boeing’s decision, each of these firms saw their valuation in the London Stock Exchange take a steep plummet. Engineering behemoth Senior PLC, which makes the 737 MAX’s airframes, experienced the strongest hit. The company’s shares fell by 9% within the first half of the day of the announcement.

Although Senior issued a statement in support of Boeing and confirmed its continued partnership, they released a statement that they were considering offloading their aerostructures division in 2020.

Apart from Senior, French aerospace component and defence provider Safran, which builds engines for the 737 MAX, announced a 2.6% fall in its share value. Kansas-based company Spirit Aerosystems, which makes fuselage parts for Boeing, saw its shares go down by 1.6%.

Moreover, UK-headquartered Meggitt also published a 1%-drop in its share value. Additionally, airlines that invested in Boeing stocks too saw a fall in value – British Airways (3%), Norwegian Airlines (2%), and Ryanair (negative). 

At its end, Boeing saw its own stocks slide down by 4%. Already, the company is billions of dollars in debt, given the excessive technical and legal expenses it had to bear. Adding to the costs are the 380 undelivered jets in the company’s storage in Washington.

However, despite the burgeoning debt, the company has confirmed that it won’t implement any layoffs and will continue to support its 12000+ workforce.

Flight scarcity threatens to leave millions stranded

The issue of stopped production aside, Boeing also faces the challenge of seeking approval from aviation agencies like the United State’s Federal Aviation Authority and EU’s European Aviation Safety Agency.

According to Boeing’s management, the firm decided to re-start 737 MAX production once the FAA and EASA provide their approvals. But with both agencies still conducting their analysis of the 737 MAX’s systems, the aircraft manufacturer’s plans may not reach fruition this year.

Unfortunately, this has affected multiple airline carriers as well. Airlines using the Boeing 737 MAX have now been forced to cut down the number of routes they run. At the head of this list is Ireland’s low-cost carrier Ryanair, which has confirmed that 50 of its 2020 summer routes have been cancelled already.

Forced to club routes and cancel a few altogether, these airlines have set into motion long delays in airports across Europe and the US. Other regions like the Asia-Pacific, Africa, and the Middle East are also expected to confront the aftermath of the significant delays in European and American airspace.

Additionally, with fewer options available, passengers may need to pay more than necessary to other airlines that still serve these cancelled routes.

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