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February 21, 2020
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Boeing ‘a big disappointment to me’ as 737 Max crisis grows

Boeing 'a big disappointment to me' as 737 Max crisis grows
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President Donald Trump on Wednesday called Boeing a “big disappointment” after the manufacturer pushed back when it expects its beleaguered 737 Max to return to service after two fatal crashes.

“Very disappointing company,” Trump told CNBC’s Joe Kernen in an interview when asked about Boeing’s new timeline. “This is one of the greatest companies of the world, let’s say, as of a year ago and all of a sudden things happened.”

Boeing executives have told suppliers and airline customers that it doesn’t foresee regulators lifting a flight ban on the 737 Max until June or July, months later than originally expected. The new timeline that Boeing disclosed on Tuesday after it was first reported by CNBC, sent Boeing’s stock down more than 3%.

Trump’s comments represent a sharp shift in tone on Boeing, one of the country’s largest exporters and defense contractors. Last week at a White House signing of the phase one trade deal with China, Trump urged Boeing executives to resolve the Max issues quickly.

“Get that going. Work together,” Trump told CFO Greg Smith, Reuters reported. “We’ve got to get that one moving fast and its going to be better than ever I think.”

Regarding new Boeing CEO Dave Calhoun, Trump said at the event last week: “It’s not your fault. He just got there.”

The crisis over the planes, which regulators grounded in March after two nearly-new Boeing 737 Max jetliners crashed within five months has already cost thousands of jobs. Boeing suspended production of the planes this month, a move that has rippled through its supply chain and cost airlines more than $1 billion in revenue.

Boeing is scrambling to complete fixes for the planes but regulators have said they have no set timeframe to allow them to fly again. The Max was Boeing’s best-selling and it has a backlog of more than 4,000 of them.

The company is under fire for including a flight-control system on the planes that was later implicated in the two crashes and not telling pilots about it before the planes were flown commercially.

Boeing reiterated to CNBC this week that the manufacturer doesn’t plan to lay off or furlough its employees who work on the 737 Max. Earlier this month, the company said it would reassign thousands of workers to other aircraft programs and facilities.

One of Boeing’s biggest suppliers, however, has already cut thousands of jobs. Wichita, Kansas-based Spirit AeroSystems, which makes fuselages and other parts on the 737 Max, said it would cut an initial 2,800 jobs because of the grounding. About half of Spirit’s revenue comes from the planes. After the layoffs, Moody’s Investors Service downgraded the company’s credit to junk territory and said the cuts were “credit negative” for the city of Wichita Sedgwick County, where the city is located.

General Electric, which makes engines for the planes through a joint venture with France’s Safran, has laid off 70 temporary workers in Quebec, but it could hire them back later. GE also makes engines for Airbus planes and can shift workers to other plants and programs and reduce overtime, according to a person familiar with the matter.

It wasn’t the first time Trump has criticized Boeing. In December 2016, weeks before he took office, Trump tweeted that the price of Boeing’s new Air Force One contract, was too expensive and threatened to “cancel order!”

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