Boeing May Suspend 737 MAX Production if Groundings Continue

Boeing may have to temporarily shutter its 737 production line if the grounding of its 737 MAX aircraft drags on, the company's CEO said Wednesday.

Dennis Muilenberg said during Boeing's second-quarter earnings call that he expects the global MAX fleet will return to service early in the fourth quarter of this year. If that timeline holds, he said the company will be able to maintain its current production rate of 42 737 MAX airframes per month and could eventually increase that output to 57 per month in 2020. But, he admitted, if the fleet remains grounded for longer than currently anticipated, production may have to be suspended in order to alleviate the backlog.

With the grounding, Boeing has been unable to deliver finished MAXes as they come off the production line. The backlog has grown to the point where Boeing has had to resort to storing jets in its employee (car) parking lots while waiting for the grounding orders to be lifted.

Related: See All of TPG's Boeing Coverage

The manufacturer's workhorse narrow-body jet has been grounded since March following the second of a pair of overseas accidents that —combined — left 346 dead.

An automated flight control system known as MCAS is suspected of contributing to both disasters. Boeing has been working with regulators, airlines and other stakeholders to address the issue since March, but progress has been slower than originally anticipated.

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In the US, for example, the three US airlines that have MAXes in their fleets have had to continually update their schedules to account for the prolonged absence of the MAX.

Related: Southwest Has Suspended 13 Routes Since Grounding of Boeing 737 MAX

Southwest, which has most MAXes in its fleet of any airline in the world, has currently removed the jet from its schedules through Nov. 2. as has American. United has done so through Nov. 3.

Passengers have not been hit by sudden cancellations since those airlines have preemptively taken the MAX flights off their schedules as the grounding has dragged on. But the grounding has affected passengers' flight options. American confirmed in July that suspended its nonstop service between Oakland and Dallas-Fort Worth because of the MAX grounding. Southwest has temporarily halted 13 nonstop routes because of the grounding, the airline confirmed to TPG earlier this month.