Photos show why Boeing was forced to stop production of its grounded 737 Max
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Dec 20, 2019, 02:06 IST
Boeing claims it is prioritizing delivering the planes instead of continued production.
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However, it will keep purchasing parts from select suppliers, although likely at a decreased rate, the New York Times reported.
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The amount of support given to contractors will be decided case-by-case.
Prior to its announcement, Boeing had already been reducing the rate of 737 Max production.
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52 planes were produced during the month of April, which had since dropped...
...to 42 planes a month.
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Boeing purchases its parts from companies like General Electric and France-based Safran, along with lesser-known specialized companies.
Safran has announced that they are cutting down production from making parts from 42 planes…
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...to 15 planes a month, the New York Times reported.
"The potential loss of talent, access to capital and incremental risk on the supply chain all create substantial uncertainty about Boeing's ability to increase production levels once the pause ends," Canaccord Genuity analyst Ken Herbert told Reuters.
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Boeing's stock dropped 4.3% at market close on Monday following the planemaker's announcement that it would halt 737 Max production.
This amounted to a loss of $8.3 billion on its market value.
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JP Morgan analysts claim Boeing will continue to lose over $1 billion a month even after stopping production, CNBC reported.
It will also cause a 0.5% decrease in the United States GDP growth rate during the first quarter of the new year.
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"As we have throughout the 737 Max grounding, we will keep our customers, employees, and supply chain top of mind as we continue to assess appropriate actions," Boeing said in a statement.
“This will include efforts to sustain the gains in production system and supply chain quality and health made over the last many months,” it continued.
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President Trump reportedly called Boeing CEO Dennis Muilenburg on Sunday to discuss the production halt and state of the company, the New York Times reported.
The Federal Aviation Administration's analysis discovered that without its intervention and the halting of 737 Max services, the plane would likely crash another 15 times over the course of 30 to 45 years, the Wall Street Journal reported.
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It is currently unclear when production will begin again.