Grounding of Boeing 737 MAX: Impact on Suppliers
While explaining the situation and its ramifications, the specialist noted that there had already been a high churn rate within the industry not only for Boeing, but also for suppliers. He explained that the grounding of the 737 MAX would continue to send shocks through the aeroplane supply chain and questioned how long the situation would take to resolve considering the FAA and other authorities have to check the aircraft for faults.
The former C-level executive explained that there were several options available to Boeing once the 737 MAX had been reinstated, including the utilisation of pricing to reinvigorate confidence in the aircraft, which would in turn put additional pressure on tier-one suppliers. Considering the 737 is the highest margin-generating programme and tier-one suppliers have long-since bared the brunt of cost pressure in the industry, this could force more tier-one suppliers out of the sector.
Boeing’s 737 MAX’s accidents did not only ground the aircraft; they also grounded Boeing’s plans to develop a next-generation new mid-sized aircraft (NMA). However, the specialist suggested that Boeing does not have an adequate business case for creating the NMA anyway and he explained why this was the case.
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The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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