Boeing (BA) plans to hire hundreds of temporary staff to help get the grounded 737 MAX planes ready for delivery. The company is waiting for regulatory safety approval.
What to expect from Boeing MAX deliveries
Citing a Boeing spokesman, CNBC reported that the company seeks experienced workers including “avionics technicians, aircraft mechanics, airframe and Powerant (A&P) mechanics, and aircraft electricians.” Boeing already posted job listings for aviation maintenance technicians, inspectors, and aircraft test technicians on its website.
The temporary employees will work at the company’s Port Moses Lake facility. Boeing has stored most of the MAX planes at the Grant County International Airport—a former military base in Moses Lake. The temporary staff will help with aircraft maintenance and delivery preparations at the airport. The company plans to move all of the stored MAX jets at Grant County to its factories in Seattle and Everett.
The 737 MAX aircraft has faced a global flying ban since mid-March following two fatal accidents within five months. The initial crash investigation reports pointed to a software glitch in the MAX’s flight-control system—the Maneuvering Characteristics Augmentation System.
Air carriers across the globe won’t accept shipments of the model until Boeing addresses the safety concerns. Despite frozen shipments for MAX aircraft, Boeing didn’t halt production. However, the company reduced its monthly output. Currently, Boeing is building 42 MAX planes every month—lower than 52 units manufactured in March.
Will MAX shipments resume in Q4?
Boeing intends to resume MAX deliveries as soon as it gets regulatory safety approval. On Tuesday, the company reiterated fixing the problem in September. Boeing hopes to receive regulatory approval in early October. The company wants to complete the necessary maintenance work ahead of time so that it can speed up the shipment process.
Overall, the worldwide grounding cost Boeing billions of dollars in lost revenues, profit, and cash flows. In the second quarter, the company recorded an after-tax charge of $4.9 billion as an estimated compensation cost for MAX customers. The after-tax charge reduced the company’s second-quarter revenues and pre-tax income by $5.6 billion.
Among major US air carriers, Southwest (LUV), American Airlines (AAL), and United Airlines (UAL) own 72 MAX planes. Southwest has faced over 20,000 flight cancellations due to the MAX grounding. American Airlines and United Airlines canceled 7,800 and 3,440 flights, respectively, in the second quarter. All three of the airlines want compensation from Boeing for lost revenues and profit due to the MAX grounding.
According to Reuters, the total cost related to the MAX fiasco has already crossed $8 billion—mainly associated with airlines’ compensation. If the regulatory approval gets delayed, the company will face a higher compensation burden. If Boeing receives regulatory approval in early October, the airlines will be able to resume MAX services in December.
Boeing stock has fallen significantly in the last five months since the Ethiopian Airlines crash on March 10. The stock has lost 21.5% since the accident. Boeing has fallen to nearly 3% as of August 20 from about 31% as of March 8. Before the Ethiopian Airlines crash, Boeing was the top performer among the Dow Jones 30 stock component. However, the stock has fallen to 20th place.
The stock’s YTD return is much lower than the iShares U.S. Aerospace & Defense ETF’s (ITA) gains. ITA’s portfolio consists of companies that assemble, manufacture, and distribute aerospace and defense equipment. ITA has risen 24.5% YTD.