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Boeing to suspend 737 Max production in January; no layoffs expected

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SEATTLE -- Boeing plans to suspend production of the 737 Max starting in January as it waits for the embattled plane to be recertified to return to service, the company announced Monday.

The company's stock price closed down more than 4% Monday after early reports that Boeing might halt the plane's production began to circulate, and then fell another 0.67% after hours following Boeing's official announcement.

The 737 Max jets are assembled at Boeing's Renton, Wash. facility.

In a statement on Monday, Boeing said it will now prioritize delivering the more than 400 Max airplanes currently in storage before producing any more planes.

The 737 Max was grounded worldwide in March after two fatal crashes — a Lion Air jet that plunged into the Java Sea in October 2018 and an Ethiopian Airlines plane downed near Addis Ababa in March — killed 346 people. But getting the plane back in the air has proven immensely difficult, causing major financial and reputational issues for Boeing.

Orders for the 737 Max dried up, and it wasn't until last month that Boeing recorded its first new orders — a total of only 30 planes — since the grounding. In the meantime, the company continued to produce the planes as it hoped for a quick recertification by airline officials around the globe.

Now that process, which has faced a number of setbacks, has been pushed into 2020 and Boeing has an inventory of more than 400 of the airplanes in storage. The company said the continued uncertainty of the 737 Max's future forced it to make the drastic move to pause the plane's production and shift its focus to delivering planes it has already produced.

Boeing released the following statement:

"We believe this decision is least disruptive to maintaining long-term production system and supply chain health. This decision is driven by a number of factors, including the extension of certification into 2020, the uncertainty about the timing and conditions of return to service and global training approvals, and the importance of ensuring that we can prioritize the delivery of stored aircraft. We will continue to assess our progress towards return to service milestones and make determinations about resuming production and deliveries accordingly.

"During this time, it is our plan that affected employees will continue 737-related work, or be temporarily assigned to other teams in Puget Sound. As we have throughout the 737 MAX grounding, we will keep our customers, employees, and supply chain top of mind as we continue to assess appropriate actions. This will include efforts to sustain the gains in production system and supply chain quality and health made over the last many months."

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