Boeing Resumes 737 MAX Production, Lays Off 6,770 Employees

Filed Under: Misc.

Boeing has announced a mixed bag of news this week — 737 MAX production will be resuming (despite the lack of demand), and there will also be layoffs.

Boeing resumes 737 MAX production

This week Boeing has resumed production of the Boeing 737 MAX in Renton, Washington. Initially the aircraft manufacturer will build these planes at a low rate, implementing more than a dozen initiatives focused on enhancing workplace safety and product quality. Boeing hopes to ramp up production of the 737 MAX as the year progresses.

Boeing initially suspended 737 MAX production in January 2020, given that Boeing had a backlog of about 300 737 MAX aircraft. This followed the 737 MAX being grounded globally in March 2019, after two fatal crashes.

During this suspension, mechanics and engineers have collaborated to refine and standardize work packages in each position of the factory, and have introduced new kitting processes.

Boeing had also temporarily suspended aircraft manufacturing altogether in late March, given the COVID-19 pandemic, and the risk that posed for Boeing employees working at the company’s factories.

Walt Odisho, Vice President and General Manager of the 737 program, had the following to say:

“We’ve been on a continuous journey to evolve our production system and make it even stronger. These initiatives are the next step in creating the optimal build environment for the 737 MAX.”

Boeing will resume 737 MAX production

Boeing laying off 6,770 employees

Boeing has now concluded the voluntary layoff program that was initially announced last month, and the company has now reached the point where involuntary layoffs are needed.

Boeing will be notifying 6,770 US-based employees that they will be impacted by this. The company will be providing severance pay, COBRA health care coverage, and career transition services for these employees.

Boeing also expects layoffs for international employees, though the details of that haven’t been finalized yet.

As it’s described, COVID-19 has had a devastating impact on the airline industry, and that means a deep cut in the number of commercial jets and services that customers will need over the next few years, which in turn means fewer jobs for Boeing employees.

As Boeing President David Calhoun describes the situation in a letter to employees:

“We are seeing some green shoots. Some of our customers are reporting that reservations are outpacing cancellations on their flights for the first time since the pandemic started. Some countries and U.S. states are starting cautiously to open their economies again. And some parts of our business, most notably on the defense side, will continue hiring to meet customer commitments and fill critical skill positions.

But these signs of eventual recovery do not mean the global health and economic crisis is over. Our industry will come back, but it will take some years to return to what it was just two months ago. The surest way through it is for every one of us to be true to what Boeing has traditionally stood for: values, integrity, quality, reliability, know-how, resilience and commitment to the needs of our customers. Let’s work together to ensure that we are those things. For our future. For each other. For everyone who counts on us.”

Boeing will be laying off thousands of employees

Bottom line

Boeing is resuming 737 MAX production, which I guess is good in terms of keeping people working. At the same time, Boeing already has around 400 737 MAXs ready to go without the plane even being certified again, so one has to wonder what the point is.

Sadly Boeing is also laying off nearly 7,000 US based employees. Unfortunately that shouldn’t come as a surprise, given the situation (and I’m sure there will be plenty more layoffs).

  1. This is the dumbest business decision ever. You can’t even legally fly this plane right now.

  2. This is the perfect time for Boeing to scrap the 737-MAX all together and start designing a new plane from scratch.

  3. You have to imagine they even be able to deliver all 400 planes already produced… not sure what the idea is being making more 737s at this point. Maybe they think airlines will downsize planes and want more 737s?

  4. This is why reading comments on a blog is just… not worth it.

    Boeing has a backlog of THOUSANDS of 737Maxs. Thousands. They need to build them to get paid. So, they will build them.

    They will also be the backbone of a majority of us airlines fleets for the next 20+ years.

    Additionally: it’s not factually to say ‘Covid 19 caused travel to plummet’

    With an IFR estimate around .26% now from the CDC – Covid is just 2x more fatal than the flu. Maybe… as it is very possible it’s even less.

    This recession and stop of traveling happened because of the internet mob demanding action. And governments doing ‘something’ to keep people happy.

    Governments that shut down the economy are responsible for this. Not a virus.

  5. They’re producing more to show strength and confidence. If they stopped making them, then who’d want the 100s they already built.

    If it turns out to be a bad idea, blame COVID-19.

  6. But remember when Boeing temporarily ceased 737MAX production in December because they weren’t able to find parking spots for the new planes that were being built? Given that most of the planes are grounded and parked in almost all airports, I wonder how will Boeing be able to find parking spots for the aircraft that are going to be built from now on?

    Also, this is really an amazing decision by Boeing. The COVID-19 helped distract the public from the 737MAX crisis and if they start working on MCAS and all the glitches now, they can perfectly time it with the resumption of operations of many other airlines in the world and make a smooth comeback into the aviation industry.

  7. To Howsrd

    There have been over 60000 “excess“ deaths in the UK. If the UK govt had shutdown a week earlier thousands would have been saved. Please do not compare this virus to the flu

  8. @Tony H
    I second that statement. Immigration officials in Heathrow were begging out authorities to let them wear gloves and masks since they tend to touch hundreds of passports and visas every day. Funny enough, until mid-May, If you live in London and went to a park for a walk, you could face legal action, but if you came from a COVID-19 epicentre, say NYC or Barcelona, you can just pass through immigration and have no quarantine or questions asked about your recent travel history and travel through London as if it were any other day.

  9. No 737-MAX will ever fly again in commercial passenger service and all existing planes will need to be scrapped, but Boeing isn’t going out of business. There will be new planes. Airlines will need them. Boeing will be in that market.

    And demand will be rising much faster than Boeing can make them, once the new plane is designed and certified. Given all the 737-MAX planes removed from the market, the demand backlog will be long.

    Boeing needs to keep its staff employed building planes so that it can ramp up to that demand in the mid-2020s. If it fires smart, experienced people, it will be much harder to ramp up. So Boeing simply has no choice: It must continue building planes that will never fly in order to keep its people and keep them skilled and ready and keep up its ability to build many, many more lucrative planes in the future.

  10. here come the conspiracy theorists like howsrd spewing about how COVID is a government plot and isn’t that dangerous. tell that to the 100k dead in the US so far, with a small fraction of the population infected. people throw around phrases like “0.26% fatality rate omg so small!” without doing the fucking math about what that fatality rate yields out to in a population of 300 million.

  11. 0.26% percent…the stupidity is strong in this country. That includes sally he huge reservoir of ASYMPTOMATIC carriers.

    Do we test asymptomatic people for the flu?? Dah no. Apples and oranges.

    Meanwhile good Boeing. Ppl are barely gonna be flying for the medium term. Good luck getting them to fly on their garbage 1980s flash updated planes.

  12. Not unexpected at all. I do hate when people tout COBRA benefits like it’s a good thing. Easier and cheaper to get your own insurance. If they still paid their share of the insurance benefit, that would be better. COBRA is VERY expensive especially when you no longer have an income.

    All of aviation is going to see at least a 20% overall reduction in workforce. Hopefully, most of these people are near retirement and go enjoy it.

  13. @Brian: “BRIAN the astrologer” knows that max will not fly again. Dont worry you will be one of the first ones to fly in max planes once certified when you will find a great/cheap airfare deal.

  14. @cam

    CDC says Influenza has 0.1-0.13% IFR yet only predicting 62k deaths for the year, it’s not a simple multiplier to an entire population lmao

  15. Sunviking82— my $800/ month COBRA is not cheap by any means, but it’s a very good policy, and that includes dental. The best coverage from the ACA marketplace would cost over $1,300 and not really measure up. I’m grateful for it.

    But I totally agree—providing a separation benefit that costs the company nothing, and is required by law, is nothing for them to boast about.

  16. Management seems to have forgotten that the reason production was halted on the 737 Max wasn’t because of COVID-19, but because it’s a piece of crap. Or maybe they’re hoping that we forgot. We haven’t.

  17. I think they just need some time to accept the fact or face the reality that this flight might not fly again; the same as how someone’s responses to covid-19 pandemics, it is just a matter of time to see how deadly it is compared to the seasonal flu.

  18. The fun thing is that most of those layoffs will come in Washington, after the local government gave them billions in tax credits so they would stay here. Instead of doing anything useful with that money (and the tens of billions in profit they’ve made recently), they instead spent more than 34 billion on stock buybacks.

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