737 MAX GROUNDED

Boe­ing halts test flights due to en­gine is­sue and de­liv­ery to cus­tomers, in­clud­ing Malindo, will be de­layed for now

New Straits Times - - Business -

BOE­ING Co said on Wed­nes­day it had tem­po­rar­ily halted test flights of its new 737 MAX air­craft due to an is­sue with the en­gine, which is jointly made by Gen­eral Elec­tric Co and Safran SA of France.

The ground­ing comes days be­fore Boe­ing was due to de­liver its first 737 MAX to an air­line and marks a high-pro­file de­lay in a pro­gramme that Boe­ing had said was ahead of sched­ule.

It poses no safety con­cerns be­cause no air­lines are yet fly­ing the 737 MAX, but it could mean a costly dis­rup­tion if the prob­lem per­sists. Boe­ing and en­gine-maker CFM say they do not know how long the de­lay will last.

Timely de­liv­ery is im­por­tant to plane­mak­ers as they get most of the pay­ment for a plane when it is handed to the buyer.

A de­lay likely would cause a buildup in Boe­ing’s in­ven­tory, “as planes es­sen­tially sit wait­ing for en­gines”, said Ver­ti­cal Re­search Part­ners analyst Rob Stal­lard.

Sep­a­rately, Air­bus said it was con­tin­u­ing flights with its A320­neo, which is pow­ered by the sim­i­lar LEAP-1A en­gine and is fly­ing cus­tomers.

Malaysian car­rier Malindo Air was set to re­ceive the first 737 MAX de­liv­ery on Mon­day and use the jet for its Kuala Lumpur-Sin­ga­pore route from May 19.

But Malindo chief ex­ec­u­tive of­fi­cer Chandran Rama Muthy said it did not plan to use the plane un­til May 22, with­out elab­o­rat­ing on the rea­son for the de­lay. Reuters

BLOOMBERG PIC

A Boe­ing 737 MAX on the runway of Boe­ing’s man­u­fac­tur­ing fa­cil­ity in Ren­ton, Wash­ing­ton. A de­lay in get­ting planes to cus­tomers will likely cause a buildup in its in­ven­tory, hurt­ing the com­pany’s bot­tom line.

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