The 737 MAX production shutdown for at least two months from January 2020, announced on Monday December 16 by Boeing, will severely affect the entire aeronautical sector. The entire chain of equipment manufacturers and medium-haul suppliers to the American aircraft manufacturer is on high alert, as the 737 MAX has been immobilized since mid-March, after two crashes which claimed the lives of 346 passengers. and crew members, has already had negative economic consequences.
The engine manufacturer Safran, which exclusively supplies MAX engines with CFM International, its joint venture with the American company General Electric, has decided to slow down. The group, led by Philippe Petitcolin, will "Cut production at least in half" LEAP-1B, the engine that powers the 737 MAX, for "Sixty days". But the engine manufacturer already warns that he "Will adapt its production level to that of Boeing". In practice, Safran could "Reduce the sail" even more drastically.
A hard blow for Safran
A heavy blow for the French group, which is the most exposed supplier. This crisis cost him 300 million euros in cash per quarter. Like the aircraft manufacturers, the engine manufacturers are, in fact, paid by the airlines mainly when the aircraft are delivered. A source of revenue dried up since the MAX was grounded by aviation regulatory authorities. As the length of the Boeing's downtime increases, and even production stops, the hole becomes deeper. From now on, the financial impact for Safran could amount to 200 million euros per month.
Certain suppliers would not rule out having recourse to measures of technical unemployment
If Safran's back is strong enough to support the shutdown of its main client's assembly lines, what about the other MAX suppliers? In France, around a hundred companies – Thales, Latécoère, Daher, LISI Group, Crouzet, Aubert & Duval, etc. -, grouped within the Boeing French Team, work for the American aircraft manufacturer, including around thirty for the 737 MAX. Moreover, certain suppliers would not rule out having recourse to measures of technical unemployment.
These are the companies "Very invested in the production of the LEAP-1B engine" that Safran has decided to monitor. The engine manufacturer fears that they will bear the brunt of the MAX crisis and fail him when Boeing decides to resume production of its medium-haul.
