DALLAS — Boeing Co.'s top executive said the company will consider temporarily shutting down production of the 737 Max if the plane's return is significantly delayed beyond the company's October forecast.
The comment by CEO Dennis Muilenburg underscores the uncertainty swirling around the company and its best-selling plane, which has been grounded since March after two deadly crashes.
Boeing reported Wednesday that it suffered its biggest quarterly loss in at least two decades, nearly $3 billion, as it absorbed financial damage caused by the Max. Revenue plunged 35% after Boeing halted deliveries of any new Max jets.
The huge second-quarter loss was expected. Boeing removed much of the suspense from earnings day when it announced last week that it would take a $4.9 billion after-tax charge for the Max. The charge was calculated from Boeing's estimate of the cost of compensating airlines for lost use of their Max planes for several months. It did not include Boeing's potential liability from dozens of lawsuits filed by relatives of the 346 passengers who died in the two crashes.
Boeing is updating U.S. and foreign regulators daily on its work to fix the plane. Based on those discussions, the company said last week that it expects the Max to resume flying early in the fourth quarter.
The Max assembly line near Seattle has stayed open, although at a reduced rate. The company even hopes to boost production gradually from the current 42 a month to 57 a month next year, but that assumes the plane will fly and Boeing will soon resume deliveries to airlines — jets have been piling up in Boeing lots since March.
"If that estimate of (an October) return to service substantially changes, then we'll have to consider alternatives," Muilenburg told analysts. "Those alternatives could include different production rates, they could include a temporary shutdown of the line."
Muilenburg's comments implied that the Federal Aviation Administration can review the company's changes to flight-control software in one month. The FAA has already been analyzing much of Boeing's work. An FAA spokesman said the agency has no preconceived timeline for returning the Max to service, and will do so only when it determines that the plane is safe.
The grounding of Boeing's plane has caused airlines including American, United and Southwest to cancel thousands of flights into early November. A pause in Max production would hit Boeing assembly workers and the company's suppliers, including engine maker General Electric.
The Max saga is already dinging durable-goods orders and U.S. exports.
Orders for U.S. nondefense aircraft and parts fell 39.4% in the first five months of 2019, compared with the same period last year, according to Commerce Department figures. Exports of civilian aircraft fell 12% in that stretch, a drop of nearly $2.8 billion.
Treasury Secretary Steven Mnuchin weighed in on the importance of fixing the Max, which was designed to compete with a plane built by Europe's Airbus.
"There is no question this is very important to us," he said on CNBC. "We compete, Boeing versus Airbus, every day."
The company is one of the largest employers in the Charleston area, where it builds the 787 Dreamliner and has support operations for other aircraft programs.
Boeing, which also builds planes in Washington state, said it lost $2.94 billion in the quarter, compared with a profit of $2.2 billion a year earlier. It reported an adjusted loss of $5.82 per share.
Revenue tumbled to $15.75 billion from $24.26 billion a year earlier.
While most of the focus Wednesday was on the troubled single-aisle 737 Max, Muilenburg said Boeing’s widebody planes, including the Dreamliners built in North Charleston, have done well “despite a fairly tough marketplace in terms of overall orders.”
Boeing’s widebody production backlog includes 5,500 airplanes worth $390 billion, with 787s making up more than 550 of that count.
Muilenburg pointed to a combined 33 Dreamliner sales — including 18 787-10 models built exclusively at the North Charleston campus — to Air New Zealand, Korean Air and Air Lease Corp. as a second-quarter highlight, adding that higher margins on the 787 helped to offset some of the 737 Max losses.
Muilenburg said he expects demand for wide-bodies to grow as airlines look to replace their aging fleets in coming years.
“We continue to see a significant wave of replacement demand early in the next decade,” he said. “And we believe our 787 and 777X families are perfectly positioned for that replacement wave that's coming. And you can see that our products are winning in the marketplace.”
He said Boeing remains confident in its build rate of 14 Dreamliners per month, split between North Charleston and Everett, Wash.
“We're continuing to gain efficiency on that line and that's allowing us to be even more competitive in the marketplace,” Muilenburg said.