Boeing cutting production rate of troubled 737 Max jet

In this file photo taken on March 28, 2019 Southwest Airlines Boeing 737 MAX aircraft are parked on the tarmac after being grounded, at the Southern California Logistics Airport in Victorville, California. (AFP)
Updated 06 April 2019
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Boeing cutting production rate of troubled 737 Max jet

  • Airlines that operate the Max will be squeezed the longer the planes are grounded, particularly if the interruption extends into the peak summer travel season
  • Indonesia’s Garuda Airlines has said it will cancel an order for 49 Max jets

NEW YORK: Boeing will cut production of its troubled 737 Max airliner this month, underscoring the growing financial risk it faces the longer that its best-selling plane remains grounded after two deadly crashes.
The company said Friday that starting in mid-April it will cut production of the plane to 42 from 52 planes per month so it can focus its attention on fixing the flight-control software that has been implicated in the crashes.
The move was not a complete surprise. Boeing had already suspended deliveries of the Max last month after regulators around the world grounded the jet.
Preliminary reports into accidents in Indonesia and Ethiopia found that faulty sensor readings erroneously triggered an anti-stall system that pushed the plane’s nose down. Pilots of each plane struggled in vain to regain control over the automated system.
In all, 346 people died in the crashes. Boeing faces a growing number of lawsuits filed by families of the victims.
Boeing also announced it is creating a special board committee to review airplane design and development.
The announcement to cut production comes after Boeing acknowledged that a second software issue has emerged that needs fixing on the Max — a discovery that explained why the aircraft maker had pushed back its ambitious schedule for getting the planes back in the air.
A Boeing spokesman called it a “relatively minor issue” and said the plane maker already has a fix in the works. He said the latest issue is not part of flight-control software called MCAS that Boeing has been working to upgrade since the first crash.
Chairman and CEO Dennis Muilenburg described the production cut as temporary and a response to the suspension of Max deliveries.
Boeing has delivered fewer than 400 Max jets but has a backlog of more than 4,600 unfilled orders. The Chicago-based company had hoped to expand Max production this year to 57 planes a month.
Indonesia’s Garuda Airlines has said it will cancel an order for 49 Max jets. Other airlines, including Lion Air, whose Max 8 crashed off the coast of Indonesia on Oct. 29, have raised the possibility of canceling.
A Boeing official said Friday’s announcement about cutting production was not due to potential cancelations. The official spoke on condition of anonymity because Boeing does not publicly discuss those details.
In a statement, Muilenburg said the reduction was designed to keep a healthy production system and maintain current employment — in effect, slowing down production now to avoid a deeper cut later, if fixing the plane takes longer than expected.
Analysts say the absence of deliveries will eat into Boeing’s cash flow because it gets most of the cost of a plane upon delivery.
Boeing declined to provide figures, but undelivered Max jets have been stacking up at its Renton, Washington, assembly plant.
Airlines that operate the Max will be squeezed the longer the planes are grounded, particularly if the interruption extends into the peak summer travel season.
They could buy used 737s, but that would be costly because the comparably sized Boeing 737-800 was very popular and in short supply even before the Max problems, according to Jim Williams, publisher of Airfax, a newsletter that tracks transactions involving commercial aircraft.
Williams said that if the Max grounding appears likely to extend into summer it will cause airlines to explore short-term leases, which could push lease rates higher, something that airline analysts say is already happening.
Boeing shares closed at $391.93, down $3.93. In after-hours after news of the production cut, they slipped another $8.98, or 2.3%, to $382.85.


Heathrow publishes ‘masterplan’ for controversial third runway

Updated 18 min 32 sec ago
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Heathrow publishes ‘masterplan’ for controversial third runway

  • London Heathrow is Europe’s busiest airport
  • Construction is expected to start in 2022, with the runway built by approximately 2026

LONDON: London Heathrow, Europe’s busiest airport, on Tuesday issued plans for its controversial third runway, including the rerouting of rivers and roads, as it sought also to allay environmental concerns.
Britain’s government last year finally approved the third runway after decades of acrimonious debate.
“Heathrow today unveils its preferred masterplan for expansion,” said a statement from the airport, which is owned by a consortium led by Spanish infrastructure giant Ferrovial.
The detailed plan includes “tough new measures” to reduce emissions, limit noise and curb night-time flights.
The M25 motorway that rings London will be rerouted under the new runway, while river corridors will also be diverted.
“We’re working with those impacted residents, communities and local authorities to identify appropriate mitigation measures,” the plan said.
“New river corridors will be created to channel the existing rivers and wildlife away from construction sites and the new runway.”
Construction is expected to start in 2022, with the runway built by approximately 2026. New terminals will not be ready until around 2050.
The expansion is expected to cost about £30 billion ($38 billion, €34 billion), according to the BBC, including £14 billion on the first phase.
The hub, west of London, aims to increase its total capacity to 130 million passengers per day, compared with the current level of about 78 million.
“Expansion must not come at any cost,” said Emma Gilthorpe, Heathrow’s executive director for expansion, presenting a new public consultation that will run until September.
“That is why we have been working with partners at the airport, in local communities and in government to ensure our plans show how we can grow sustainably and responsibly — with environmental considerations at the heart of expansion.
“This consultation is an opportunity for people to have their say on our preferred masterplan,” she added.
Heathrow will also issue compensation for affected homeowners, and establish a noise insulation policy and a community fund.
The third runway has faced stiff opposition for many years from campaigners who cited the negative impacts on noise and air pollution, habitat destruction, transport congestion, and climate change.
Last month, London Mayor Sadiq Khan, along with environmental charities and local councils, lost a court battle to prevent the Heathrow expansion.
Britain’s Conservative government argues that the project will provide a major boost to Britain’s post-Brexit economy and could create up to 114,000 local jobs by 2030.
Heathrow is owned by an investment consortium comprising also sovereign wealth funds from nations including China, Singapore and Qatar.