Boeing says 737 MAX production to resume before mid-year

CEO Dave Calhoun said Boeing is not planning to scrap the 737 MAX despite repeated technical concerns about the plane.

    Boeing's temporary production halt for its 737 MAX has affected the broader economy, even though none of its staff was laid off [File: David Ryder/Bloomberg]
    Boeing's temporary production halt for its 737 MAX has affected the broader economy, even though none of its staff was laid off [File: David Ryder/Bloomberg]

    Boeing expects to resume production of its troubled 737 MAX plane months before its forecasted mid-year return to service, as the United States planemaker said it would continue to fly the aircraft for a generation, Chief Executive Officer Dave Calhoun told reporters on Wednesday.

    The company is not considering scrapping the MAX, the recently appointed chief said.

    More:

    "I am all in on it and the company is all in on it," Calhoun said, adding that Boeing will not launch a marketing campaign to encourage customers to fly on 737 MAX planes again.

    The company announced a production halt for the 737 MAX in December after the plane was grounded globally following two deadly crashes in Indonesia and Ethiopia within five months of each other.

    Boeing previously said it expected the plane to be grounded until mid-2020, but the latest delay in its projected return to service is due to the company's decision to endorse simulator training for pilots before they resume flights, Calhoun said.

    "We can get this thing back on its horse and we will," he added.

    The CEO said he did not see recent issues raised about wiring or software as "serious problems."

    He declined to provide a specific date for resumption of production but said it "will be reinvigorated months before that moment in June because we have to get that line started up again."

    Calhoun, who took over as CEO earlier this month after the board removed Dennis Muilenburg in December, also said the company would make some changes to the 737 MAX production line to make it more efficient.

    He said before certification, there would be "a few more things somewhere along the way that the FAA and us will determine need a little extra work and we'll do it. They won't be big emergencies things, they won't be things that take the airplane down."

    Calhoun said the company should have not have repeatedly revised the plane's forecasted return. "It was hard for anybody to trust us," he said.

    He reiterated that the company was not planning to lay off any employees because of the latest MAX delay.

    But the production delay is already threatening to have a negative effect on the US economy, with gross domestic product expected to fall as much as 0.5 percentage points.

    US President Donald Trump on Wednesday told CNBC that Boeing is a "very disappointing company."

    United Airlines said on Wednesday that it does not expect to fly the Boeing 737 MAX in mid-2020.

    Calhoun said Boeing is not planning to cut or suspend its dividend to investors because Boeing has the "financial capacity and capability to do the things we need to do." The chief executive said he "will stay on that path unless something dramatic changes."

    Boeing shares closed down 1.4 percent on Wednesday.

    New mid-sized aircraft

    Calhoun also sent Boeing's engineers back to the drawing board on proposals for a new mid-market aircraft, effectively shelving - in their current form - plans worth $15bn to $20bn that had been overtaken by the 737 MAX crisis.

    A decision on whether to launch a New Midsize Airplane (NMA) seating 220-270 passengers, which seemed imminent barely a year ago, had already been postponed as Boeing gave all its attention to the 737 MAX crisis.

    "Since the first clean sheet of paper was taken to it, things have changed a bit ... the competitive playing field is a little different," Calhoun told journalists on a conference call on Wednesday.

    "We're going to start with a clean sheet of paper again; I'm looking forward to that," Calhoun said.

    He also spoke of a fresh approach to the market.

    A Boeing spokesman said Calhoun had ordered up a new study on what kind of aircraft was needed. New aircraft typically take six to seven years or more to bring to market once a decision is made, though Boeing aims to shorten that in part through digital technology and new business models designed around the NMA.

    Calhoun "has asked the team to do an assessment of the future market and what kind of airplane is needed to meet the future market," spokesman Gordon Johndroe said.

    SOURCE: Reuters news agency