Boeing to Resume 737 Max Production at Low-rate This Year: CEO Calhoun

Boeing expects to resume 737 MAX production at low rates in 2020, gradually increasing to 31 planes per month during 2021, with gradual increases to correspond to market demand, Boeing President and CEO Dave Calhoun said in a letter to employees today.

We are progressing toward the safe return to service of the 737 MAX in close coordination with the U.S. Federal Aviation Administration and global regulators, he said.

Boeing plans to reduce the 787 production rate to 10 per month in 2020 and to 7 per month by 2022, continuing to evaluate the rate after that.

Reduce the combined 777 / 777X production rate to 3 per month in 2021 and take a measured approach to the 777X rate ramp.

The 767 and 747 production rates will remain unchanged.

The pandemic is delivering a body blow to our business — affecting airline customer demand, production continuity and supply chain stability

The demand for commercial airline travel has fallen off a cliff, with U.S. passenger volumes down more than 95% compared to last year. Globally, commercial airline revenue is expected to drop by $314 billion this year.

As a result, airlines are delaying purchases for new jets, putting the brakes on delivery schedules and deferring elective maintenance. We’re also seeing a dramatic impact on our commercial services business, as grounded airline fleets decrease the demand for our offerings, he said.

The letter, posted on Boeing’s website  said:

- -We’re making progress on our development programs, including the 777X, 737 MAX 10 and CST-100 Starliner.

-We continue to support our defense customers with progress across our future franchise programs, including MQ-25, T-7A Red Hawk, MH-139A Grey Wolf and our extra large unmanned undersea vehicle.

-Our Government Services business is growing as we earn new and follow-on business with our global defense customers, who look to us to support their fleet performance and mission readiness.

-We continue our work on the KC-46A tanker. The outcome of this month’s agreement with the U.S. Air Force on the tanker’s Remote Vision System means KC-46 will become the standard by which all future refueling aircraft are measured.

Regarding pulling out from a joint venture agreement with Embraer, Calhoun said: We announced Saturday that we have terminated the agreement we had to establish a strategic partnership between our two companies. We worked diligently for two years to finalize the transaction — one that would have included commercial and defense joint ventures. But ultimately we could not come to a resolution around critical unsatisfied conditions for the deal under our Master Transaction Agreement (MTA). It is deeply disappointing, but we had reached a point where continued negotiation was no longer helpful, so we exercised the rights set out in the MTA to terminate the agreement.