Spirit Aero to Pause Boeing Max Fuselage Production

Spirit AeroSystems said late Wednesday that it has received notice from Boeing to cease working on four 737 Max fuselage shipsets and avoid starting production on another 16 due for delivery this year in a sign that the Chicago-based airframe maker has adjusted its own near-term delivery schedules for the model. The letter from Boeing, dated June 4, cited a need to align delivery schedules to customer needs during the continuing Covid-19 crisis and to mitigate the expense associated with unnecessary production costs.

“Based on the information in the letter, subsequent correspondence from Boeing dated June 9, 2020, and Spirit's discussions with Boeing regarding 2020 737 Max production, Spirit believes there will be a reduction to Spirit's previously disclosed 2020 737 Max production plan of 125 shipsets,” said the Wichita-based supplier in a written statement. “Spirit does not yet have definitive information on what the magnitude of the reduction will be but expects it will be more than 20 shipsets.”

Spirit added that it plans to work with Boeing to set a definitive production plan for this year and manage the 737 Max production system and supply chain.

Asked for comment, Boeing elected to defer to the Spirit statement. "From our perspective, the gradual restart of 737 Max production is progressing smoothly as we focus on quality and safety, as well as the health of our employees," said a Boeing spokesman. "As we shared in our first quarter earnings release, the impact of Covid-19 on our industry has resulted in a slower production rate ramp-up on the 737 program. To reflect the slower ramp and align our supply inventories, we’re working closely with our suppliers to adjust delivery schedules and rate profiles as appropriate."

As a result of the production pause, Spirit has decided to place certain Wichita hourly employees who work on the Max program on a 21-calendar-day unpaid temporary layoff, effective June 15. It also said it would reduce the hourly workforce in Tulsa and McAlester, Oklahoma, effective June 12.

The pause in Max fuselage production marks yet another interruption to Spirit’s operation following Boeing’s decision in December to halt assembly of the model due to its extended grounding by world aviation authorities. Boeing resumed production of the Max at a low rate in late May, and plans call for the 737 Max rate to accelerate more slowly than originally planned following the narrowbody’s year-and-half-long grounding. In a drastic departure from plans to raise the 737’s peak production rate of 57 a month to as many as 63, Boeing now sees 737 Max rates gradually increasing to just 31 per month next year and modestly rising with any increased market demand thereafter.

Meanwhile, Boeing continues to work on fixes to the airplane's flight control design following the twin crashes of the Max in October 2018 and March 2019. Specifically, the company continues to work on the software validation and required technical documentation to allow it to proceed to a certification flight. Although Boeing has not publicly said when it expected flight testing to start, Bloomberg and Reuters reported recently that unnamed sources within the company identified late June as the target. During an April 29 earnings call, Boeing CEO David Calhoun said he hoped the company could resume 737 Max deliveries during the third quarter of this year.