Boeing’s decision to suspend production of its troubled 737 Max jet in the wake of two deadly crashes has looked increasingly likely as doubts mounted about when the airliner would return to service.

The short-haul aircraft, which launched in 2017, suffered its first crash in October 2018, when Lion Air Flight 610 was lost off Indonesia soon after take-off, killing all 189 passengers and crew.

Five months later, Ethiopian Airlines Flight 302 went down in similar circumstances soon after leaving Addis Abba airport, killing all 157 on board.

Days later, the Max was grounded, with regulators in Europe and China acting first, forcing President Donald Trump to make an emergency order to take the Max out of service amid criticism that the US was slow to act.

Since then the nearly 400 Max planes in service have been put into storage while Boeing and investigators looked at what caused the crashes and how to fix the problem.

Work has focused on the “MCAS” system on the aircraft, which was installed to compensate for the Max’s more powerful engines, and pushes the nose down if it thinks the aircraft is flying too steeply and will stall. Some have speculated the MCAS was inadvertently sending planes into a dive from which pilots struggled to recover.

Initially Boeing hoped to have the Max back in service by the autumn, but this date slipped as more issues were discovered. Aviation regulators signalled their concerns and it is now understood that the soonest the Max might be cleared to fly is February.

Financial hit
Boeing has continued building the Max while investigations were carried out. The company has nearly 4,500 on order worth almost $550bn at list prices (each craft is worth about $121m each).

Since the grounding about 400 have come off the production line, even though the company has reduced the rate it builds them at by almost a fifth to 42 a month. These aircraft cannot be handed over to airlines until the Max is certified as safe to fly, meaning they are currently piling up at Boeing’s factory and in desert storage sites.

So far Boeing has taken a hit of about $9bn from the Max crisis with some experts predicting this sum could double. Halting production – starting in January – is a sensible move to reduce costs.

Boeing asserts that “safely returning the 737 Max to service is our top priority”.

The company explained that the work stoppage – the biggest to affect the company in 20 years – was about “prioritising the delivery of stored aircraft” and that staff working on the Max would be reassigned.

An internal memo described the decision as a “temporary move” that would put Boeing’s “system in a better position to recover and more efficiently deliver completed airplanes once we safely return the 737 Max to service”.

Jefferies analyst Sheila Kahyaoglu estimates that building Max at a rate of 42 a month means Boeing is burning through $4.4bn per quarter; stopping work will halve that.

Airlines are unlikely to feel much short-term impact from the decision to stop production. Those who have already taken delivery of the Max or have the aircraft on order have anticipated prolonged disruption.

Many have taken the Max out of their planning schedules well into next year and Boeing is facing massive compensation claims from affected carriers.

No quick fix
Assuming that a solution is found and certified for the Max so it can return to flight in the spring, Boeing cannot just hand over the aircraft it has sitting around its base.

Analysts believe Boeing will only be able to fix existing planes at a rate of around 70 a month, meaning it will take about six months to run through the backlog.

This is assuming that the fix is a software one and does not require hardware changes, which would entail more delays.

Investigations have also recommended more training for pilots, which could further slow the Max’s return.

International regulators may also seek greater reassurance before giving the plane the green light. Previously, a sign-off from US regulators was accepted by their international peers. But the US Federal Aviation Administration has come in for stinging criticism of its handling of the Max crisis.

It is also possible the Max could face a consumer backlash, with passengers reluctant to board an airliner whose safety record they question.

SOURCE YAHOO / The Telegraph, read more..