Watch CBS News

Boeing shares slip amid report it may cut 737 Max production

Boeing suspends production of 737 Max
Boeing suspends production of 737 Max 01:13

Boeing has suspended production of its troubled 737 Max airplanes Monday. Read the latest update here. Our original story appears below.

Boeing shares fell Monday after the Wall Street Journal late Sunday reported the company may cut production of the grounded 737 Max jet or temporarily stop making it. The aerospace company has been told by U.S. regulators that its timetable for a return to the skies was not realistic, the report said.

Shares of Boeing declined more than $14, or about 4.3%, to $321. The stock has lost about 21% of its value since March 10, when Ethiopian Airlines Flight 302 became the second deadly crash involving a 737 Max aircraft.

Boeing had earlier raised the possibility of further cutting or suspending production. On the company's third-quarter conference call in October, CEO Dennis Muilenburg said the company would likely temporarily suspend production if the jet wasn't flying by year-end.

The Journal reported that Boeing's board would consider the moves at a meeting that began Sunday and would run into Monday. The newspaper, citing people it did not identify, said management is increasingly seeing production cuts as a viable option.

A temporary pause in manufacturing the 737 Max could help Boeing divert resources to addressing the U.S. Federal Aviation Administration's concerns with the aircraft, Bank of America analysts said Monday in a note to investors.

"Considering that the 737 Max grounding has stretched far longer than what Boeing management anticipated, a temporary pause in production could be the most prudent course of action in order to minimize the free cash burn," the analysts wrote.

Working with the FAA

Boeing wouldn't comment to the Associated Press Sunday night, but the company repeated a previous statement that it continues to work with the FAA and global regulators on the Max, which was grounded in March after deadly crashes in Indonesia and Ethiopia that killed a total of 346 people.

"We will continue to assess production decisions based on the timing and conditions of return to service, which will be based on regulatory approvals," the Boeing statement said.

The report came just days after a senior FAA official told legislators that Boeing is pushing for an unrealistically quick return of the Max and that there is a perception the company is pressuring the regulator.

In an email Thursday to key congressional committees, Philip Newman, FAA assistant administrator for government and industry affairs, said Administrator Stephen Dickson "is concerned that Boeing continues to pursue a return-to-service schedule that is not realistic" because of various delays. Newman wrote that Dickson is clear that FAA and Boeing "must take the time to get this process right."

Billions in costs

The grounding of the Max is costing Boeing and airlines billions. Boeing has been eager to signal that the plane could soon fly again. Recently, the company said it expected the FAA to permit shipments of new Max jets in December and approval of a pilot-training program for airlines in January.

Boeing is waiting for the FAA and other regulators to sign off on changes to flight control software that was a major factor in the two crashes.

Boeing said in October that production cuts may be needed if a decision on letting the plane fly again is delayed into next year.

Production cuts could result in layoffs at the plant near Seattle that could help Boeing control its expenses as it waits for the FAA and other regulators to let the Max back into the air. Companies that supply parts to the plane also may have to cut production.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.