September 10, 2018 / 10:19 PM / 14 days ago

Boeing calling back retirees to fix 737 production snags

SEATTLE (Reuters) - Boeing Co (BA.N) is bringing retired workers back on the job as the world’s largest planemaker tries to fix delays at its 737 jetliner plant outside Seattle, a union official told Reuters on Monday.

The snarl at its plant in Renton, Washington, triggered by shortages of engines and fuselages as Boeing sped production to record levels in June, is likely to hurt third-quarter results and threatens its goal to boost build rates again in 2019, some analysts said after meetings in the Seattle area last week.

Single-aisle aircraft like the hot-selling 737 and Airbus (AIR.PA) A320 families are the cash cows of the world’s two largest aircraft manufacturers.

Investors will get a peek on Tuesday at how far behind Boeing is when it releases its order and delivery tallies for August, a month after deliveries fell to the lowest level in years. Deliveries are crucial to planemakers because that is when airlines pay most of what they owe for the aircraft.

Boeing started hiring retired mechanics and inspectors on a temporary basis after reaching an agreement with the International Association of Machinists and Aerospace Workers on Aug. 15, union spokeswoman Connie Kelliher said. Boeing had a similar agreement with the union last autumn following a round of voluntary layoffs, Kelliher said.

Boeing spokesman Paul Bergman said the company was dedicating additional resources to the Renton site “to ensure timely deliveries to our customers.”

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Boeing has already deployed about 600 employees and new hires to Renton in recent weeks to help fix delays, analysts said. It was not clear how many retired workers Boeing intends to hire.

2019 SPILLOVER?

About 50 semi-finished 737s were scattered around the Renton plant last week, analysts said, several times the number of semi-finished aircraft Reuters reported in July.

Boeing largely attributes the snarl to shortages of fuselages from Wichita, Kansas-based Spirit AeroSystems Inc (SPR.N) and engines from CFM International Inc, a venture between France’s Safran (SAF.PA) and General Electric Co (GE.N).

“We are working closely with our suppliers Spirit and CFM as they track toward recovery, as well as our customers,” Bergman said. “Our team has been mitigating supplier delays, and our factory continues to build 52 airplanes per month.”

CFM is working to fix delays by year-end, the GE-Safran venture said. Spirit did not immediately respond to a request for comment.

Among airlines with large 737 fleets, American Airlines Group Inc (AAL.O) has seen slight delays on a small number of 737 MAX deliveries, while No. 4 carrier Southwest Airlines Co (LUV.N) sees “minor changes” on future deliveries, but the delays have not disrupted operations, company representatives said.

Aircraft leasing company Air Lease Corp (AL.N) was still seeing 737 delivery delays of “a month or less,” spokeswoman Laura Woeste said.

Reporting by Eric M. Johnson in Seattle; Additional reporting by Sanjana Shivdas and Ankit Ajmera in Bengaluru; Editing by Peter Cooney

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