Trump Called Boeing CEO To Discuss 737 Max Production Halt

Until know, we knew there were White House whistleblowers leakers when Trump spoke to world leaders. It now appears there are also leakers – at least three of them – when the president speaks to CEO of US companies.

According to the NYT, on Sunday the US president called Boeing’s embattled CEO “to discuss the company’s plans to halt production of the 737 Max” according to “three people with knowledge of the matter who spoke on the condition of anonymity to talk about a private call”, which it appears would not remain private for too long.

Trump told the executive, Dennis Muilenburg, that he had heard that Boeing was planning to permanently shut down the Max production line, to which the Boeing CEO assured the president that any pause to production would be temporary, and that there would be no layoffs as a result of the move. On the roughly 10 minute call, Trump also expressed concern about the health of the company more broadly, and asked whether Muilenburg was doing O.K.

Trump reportedly also asked about the status of the fix for software that Boeing developed for the Max and which was found to have played a role in both crashes. Muilenburg said that the company had a fix ready, but that American and international regulators still had to test it and approve it.

Ironically, just one day later Boeing announced it was “temporarily” halting production of the 737 Max, which had been grounded for nine months after two crashes that killed 346 people, sending its stock sliding.

While it is unclear just how long the production halt will last, certainly until Boeing gets FAA clearance to fly the 737 MAX again, we reported last night that even a brief production halt will shave off about 0.5% from Q1 GDP as a result of a $20BN decline in the pace of inventory accumulation, which would push it to approximately 1%, which would result in the worst quarter for US GDP in years, and would leave the US economy precariously close to a recession.

The risk that the 737 MAX closure would potentially impair the US economy may explain Trump’s concern; sure enough, the decision to temporarily shut down the Max factory in Renton has already sent shockwaves across the economy and the aviation industry, and underscored just how deeply the Max crisis has rattled one of America’s most influential companies.

Separately, the NYT also reports that Boeing’s board gathered in Chicago for a scheduled meeting and, with company executives, deliberated either further reducing production of the Max or temporarily shutting the factory down. The company decided to halt production of the plane, a drastic move that signals just how uncertain the return of the plane remains. Ironically, Boeing’s decision to shut down production came just a month after Boeing reports dismal earnings but sent the stock soaring when the company said it expected the FAA to allow the plane to return to services as soon as December.

In response to the Boeing announcement, on Tuesday, Southwest Airlines, the biggest Max customer, said it would further postpone Max flights until April, while suppliers around the world are bracing for a prolonged disruption as a result of the shutdown.

The NYT also pointed out that the call on Sunday was not his first conversation with the president.

Before the Max was grounded, Mr. Muilenburg and Mr. Trump negotiated about Boeing’s contract to build Air Force One planes at the president’s Mar-a-Lago resort in Florida. Mr. Trump joined Mr. Muilenburg for a tour of Boeing’s 787 Dreamliner factory in North Charleston, S.C.

Then, two days after the second accident, in Ethiopia on March 10, Mr. Muilenburg called Mr. Trump and insisted the Max was safe. The United States grounded the plane the next day, however, after most other regulators around the world had already done so.

To be sure, Trump has been following the 737 MAX crisis closely from the start. In April, Trump tweeted: “If I were Boeing, I would FIX the Boeing 737 MAX, add some additional great features, & REBRAND the plane with a new name,” he wrote on Twitter in April. “No product has suffered like this one. But again, what the hell do I know?”

What do I know about branding, maybe nothing (but I did become President!), but if I were Boeing, I would FIX the Boeing 737 MAX, add some additional great features, & REBRAND the plane with a new name.
No product has suffered like this one. But again, what the hell do I know?

— Donald J. Trump (@realDonaldTrump) April 15, 2019

Considering the devastating hit to Boeing’s reputation, and the fact that two thirds of Americans have responded they would not feel comfortable flying on a 737 MAX, it appears that Trump was right again.