TEHRAN, Dec 19_Boeing's temporary halt in production of its 737 MAX jet lays bare a deepening crisis that could soon weigh even more heavily on the American economy.
TEHRAN, Young Journalists Club(YJC)_The aviation giant's announcement late Monday put no timeframe on the stoppage. But Wall Street analysts immediately began accounting for a bigger earnings hit -- with effects that could extend well into the 2020s as Boeing remains stuck in crisis mode after two deadly crashes.
Analysts said the halt will be a blow to key MAX suppliers, potentially dooming some companies, and will mar US growth through the loss of investment and exports on the macroeconomic ledger.
Boeing's announcement "creates more questions than answers," Bank of America analyst Ronald Epstein said in a client note, adding that both the length of the shutdown and its effects on the supply chain were crucial but unanswered questions.
Gregory Daco, chief US economist at Oxford Economics, put the hit to first-quarter growth at about 0.5 percent. Such a drag is "relatively large for one specific company," Daco told AFP in an interview.
"The US is facing a number of headwinds and the US economy is cooling as we head into 2020," he said. "So this is a shock."
Shutdown floated in July
Halting production puts into effect a scenario the company first floated in July as a contingency measure.
A stoppage "is not something we want to do but it is an alternative we have to prepare for as a smart part of our thorough and disciplined process here to make sure we're covering all scenarios," Boeing's Chief Executive Dennis Muilenburg said at the time.
Boeing in April cut production on the plane to 42 from 52, weeks after the second of two deadly crashes that together killed 346 people.