By Aaron Gregg / The Washington Post
Citing “ongoing uncertainty” involving Boeing’s 737 Max jet, airplane parts supplier Spirit Aerosystems has sent layoff notices to roughly 2,800 employees at its plant in Wichita, Kansas.
About half of Spirit’s annual revenue comes from supplying parts for the Max, which has been grounded for months following two fatal crashes. In December, Boeing announced it would indefinitely halt production of the Max beginning in January.
Spirit builds the 737 Max’s entire fuselage as well as smaller components such as thrust reversers, engine pylons and wing components.
The company said in its release that Boeing has not told it how long the production suspension will last, or given it any information about what future production rates might look like. Boeing, in turn, is waiting for word from the Federal Aviation Administration for word on when the planes will be cleared to fly again.
“Spirit is taking this action because of the 737 Max production suspension and ongoing uncertainty regarding the timing of when production will resume and the level of production when it does resume,” Spirit said in a news release. “This decision allows Spirit to begin aligning its cost structure to the production suspension and, after such suspension, what Spirit expects will be production levels lower than Spirit’s levels in 2019.”
The company expects to conduct further layoffs “later this month” at two factories in Oklahoma. There could be further layoffs after that, the company said in its announcement.
The Boeing 737 Max has been grounded since March after regulators concluded that equipment flaws played a role in a pair of deadly plane crashes that killed 346 people in Indonesia and Ethiopia. For more than a year, Boeing has been working on a set of fixes designed to make the plane safer. But the timeline for clearing them to fly again has continually been pushed back as more technical problems were discovered.
In December, the Chicago-based aerospace giant announced it would stop producing the 737 Max in January, roughly 10 months after global regulators grounded the planes. Boeing has described its production halt “the least disruptive decision to maintaining long-term production system and supply chain health,” and pledged to work with suppliers to lessen the impact when possible.
The decision quickly rippled through the global aviation industry. Southwest Airlines, the largest 737 Max customer, announced it would cancel approximately 300 flights a day through the busy holiday travel season. American Airlines is telling customers it expects the jet to be recertified by April 7. And United Airlines, another 737 Max customer, announced it would pull flights through June 4, the longest period of any airline.
The ban on deliveries has been costly for Boeing, leading it to a historically bad quarterly loss of $3.38 billion last year. Revenue fell $20 billion in the most recent quarter, a 21 percent drop from the previous year.
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