By: Carter Copeland
Slower for longer…BA’s mid-2020 return-to-service estimate issued yesterday provides a rough confirmation of the slower production ramp being considered by suppliers in recent weeks (21/month post-production restart with shallower steps up through 2021). The BA statement was pretty vague in that it didn’t include commentary on the timing of a production restart or associated ramp up. Additionally, it’s not entirely clear what the company’s estimate assumes for formal certification milestones, necessary time for pilot training, and a lag to “ungrounding” (a return to airline revenue service). Nonetheless, based on recent supplier actions and the company’s growing emphasis on working down the 737 Max inventory pool, the announcement supports a slower-for-longer production plan, even if the revised estimate includes some buffer for unanticipated delays that may not occur (which is clearly the case).