FAA gives Boeing green light to get 737 Max back in the air

The Federal Aviation Administration started Boeing down the long runway to return to flying its 737 Max airplanes. However, the aerospace company will have to throw off a lot of ballast to get there, by its estimation.

“Boeing previously announced we would adjust the size of our company to reflect new market realities through a combination of voluntary layoffs, natural turnover, and involuntary layoffs, with deeper reductions in areas most exposed to the commercial aviation market,” company spokesman Ivan Gale told the Washington Examiner.

“Through mid-October, Boeing had accounted for workforce reductions of approximately 19,000 employees. Also, in October, Boeing announced that through additional workforce actions, as well as natural attrition, it expects to lower the size of its workforce to around 130,000 employees by the end of 2021,” he added.

According to the company’s website, Boeing currently employs “more than 153,000 people across the United States and in more than 65 countries.” Taking that down to 130,000 would require the reduction of more than 20,000 jobs.

Gale blamed “the impact of the COVID-19 pandemic” for the first round of layoffs. Gary Leff, the author of the influential View From the Wing travel website, agreed the pandemic is a considerable part of Boeing’s problem.

“Overall, Boeing’s commercial aircraft business is going to be held back by the woes of the travel industry. Even as the world overcomes the pandemic, the face of travel may change, and airline recovery may be slow,” Leff told the Washington Examiner.

The other problem is that Boeing’s fleet of 737 Max airplanes was grounded worldwide for a long time, over 20 months. Previous Boeing CEO Dennis Muilenburg misjudged how long the safety review process would take after two fatal Max crashes. The company kept cranking the Max out. “We currently have approximately 450 737 Max aircraft in inventory,” Gale said.

A Nov. 18 announcement on the FAA website said Administrator Steve Dickson “signed an order that paves the way for the Boeing 737 Max to return to commercial service.”

The regulator’s order would require mostly software fixes to the Maxes and special training for pilots flying those planes. Previously, the FAA did not require pilots certified on Boeing 737s to do extensive training for the 737 Maxes, even though the two planes fly very differently.

Other nations’ regulators will likely do the same after some wrangling. Gale said that Boeing was “work[ing] closely with global regulators to safely return the 737 [Maxes] to service worldwide.” A week after the FAA announcement, Brazil’s regulators also cleared the Max to fly again.

Yet, clearing out Boeing’s inventory of Maxes will be no mean feat.

“They can deliver planes and sell more planes, and that’s an improvement over where they were. It’s unclear they’ll be making any money on the program for a while, as they need to cut prices drastically to get airlines to buy, especially during the pandemic. Used aircraft prices on parked planes are relatively attractive for many carriers around the world as an alternative, and Airbus narrow-bodies have a better reputation,” Leff said.

“Boeing’s prospects overall are as much driven by geopolitical events and demand for its military aircraft as for its commercial ones,” he added.

Previously, Boeing could count on subsidies and bailouts from many state governments, but the coronavirus made that more difficult. The website Subsidy Tracker documented over $14 billion in subsidies to the company from state and local governments, now strapped for cash.

Fortunately for the aerospace giant, Subsidy Tracker also found an additional $70 billion in loans, loan guarantees, and bailout assistance from the federal government since the year 2000. Much of that was courtesy of the Export-Import Bank, which has been derisively nicknamed “Boeing’s Bank.”

After years of fighting in Congress, anti-Ex-Im Bank activists lost. Congress reauthorized the bank last December. “It is still up to no good and still intensely Boeing-focused,” Mercatus Center fellow Veronique de Rugy told the Washington Examiner.

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