Boeing tells supplier to stop work on 737 MAX

Boeing has told its biggest supplier to freeze a recently restarted production of parts for the 737 MAX.

Airplane fuselages await work at Spirit AeroSystems in Kansas

Boeing has told its biggest supplier to freeze a recently restarted production of parts for the 737 MAX to prevent creating a glut of new jets for airlines adjusting to the slump in demand amid the coronavirus pandemic.

Spirit AeroSystems Holdings, which makes the fuselage and other parts for the MAX, said late Wednesday it had been asked by Boeing to halt efforts on four MAX jets and to avoid starting work on 16 more planes.

The moves highlight a sharp industry divide over how many planes Boeing and rival Airbus should make. Executives are split over whether airlines will opt for new planes or hold on to older aircraft as they recover from depressed demand.

Boeing said it was continuing the 737 MAX production it resumed two weeks ago, but had temporarily asked its biggest supplier to halt further work, likely reducing the number of new planes it makes this year. The primary reason doesn’t appear to stem from any new complication in securing essential federal safety approvals to return the MAX fleet to the air.

“To reflect the slower ramp and align our supply inventories, we’re working closely with our suppliers to adjust delivery schedules and rate profiles as appropriate,” a Boeing spokesman said on Thursday.

Boeing shares were recently down about 11 per cent, with Spirit AeroSystems shedding 13 per cent. The S&P Aerospace & Defence Index was 6 per cent lower as other suppliers sold off.

More than half the world’s fleet, some 14,000 jets, has been parked after travel restrictions and weakening economies brought much of the global airline industry to a halt. Boeing has delivered just 60 jets this year.

The US aerospace giant halted MAX production in January after building an inventory of about 450 planes that remain grounded by regulators following two fatal crashes. It had already delivered more than 380 of the aircraft.

Spirit shares had soared alongside those of Boeing in recent weeks, as airlines have announced plans to resume more flying than previously expected this northern summer and economies start to reopen from lockdowns and travel bans.

Still, Spirit said it didn’t expect to produce parts for as many as the 125 MAX jets laid out in a deal inked with Boeing in April. Spirit has already cut thousands of jobs because of the prolonged MAX grounding.