Davos WEF
Davos WEF

Trump calls Boeing 'a very disappointing company' as 737 Max crisis grows

Key Points
  • Trump called Boeing a "big disappointment" after the company pushed back the 737 Max's return to service.
  • The crisis over Boeing's 737 Max planes after two crashes has already cost thousands of jobs.
  • Treasury Secretary Steven Mnuchin recently estimated it could cost half a point of economic growth.
Trump: The Boeing situation is a 'big disappointment'

President Donald Trump on Wednesday called Boeing a "big disappointment" after the manufacturer pushed back when it expects its beleaguered 737 Max to return to service after two fatal crashes.

"Very disappointing company," Trump told CNBC's Joe Kernen in an interview when asked about Boeing's new timeline. "This is one of the greatest companies of the world, let's say, as of a year ago and all of a sudden things happened."

Boeing executives have told suppliers and airline customers that it doesn't foresee regulators lifting a flight ban on the 737 Max until June or July, months later than originally expected. The new timeline that Boeing disclosed on Tuesday after it was first reported by CNBC sent Boeing's stock down more than 3%. Boeing shares were little changed in premarket trading on Wednesday after Trump's comments.

The company is under fire for including a flight-control system on the planes that was later implicated in the two crashes and not telling pilots about it before the planes were first flown commercially in 2017.

Trump's comments represent a sharp shift in tone on Boeing, one of the country's largest exporters and defense contractors. Last week at a White House signing of the phase one trade deal with China, Trump urged Boeing executives to resolve the Max issues quickly.

President Donald Trump speaks with CNBC at the 2020 World Economic Forum in Davos, Switzerland on Jan. 22nd, 2020.
Gerry Miller | CNBC

"Get that going. Work together," Trump had told CFO Greg Smith, Reuters reported. "We've got to get that one moving fast and it's going to be better than ever I think."

Regarding new Boeing CEO Dave Calhoun, Trump said at the event last week: "It's not your fault. He just got there."

Treasury Secretary Steve Mnuchin earlier this month estimated the Max problems could slow U.S. economic growth by half a percentage point.

The crisis over the planes, which regulators grounded in March after two nearly new Boeing 737 Max jetliners crashed within five months, has already cost thousands of jobs. Boeing suspended production of the planes this month, a move that has rippled through its supply chain and cost airlines more than $1 billion in revenue.

Boeing is scrambling to complete fixes for the planes, but regulators have said they have no set timeline for when they will allow them to fly again. The Max was Boeing's best-selling aircraft and it has a backlog of more than 4,000 of them.

Boeing reiterated to CNBC this week that the manufacturer doesn't plan to lay off or furlough employees who work on the 737 Max. Earlier this month, the company said it would reassign thousands of workers to other aircraft programs and facilities. The Chicago-based company employees more than 150,000 people.

Employees work on Boeing 737 MAX airplanes at the Boeing Renton Factory in Renton, Washington on March 27, 2019.
Jason Redmond | AFP | Getty Images

One of Boeing's biggest suppliers, however, has already cut thousands of jobs. Wichita, Kansas-based Spirit AeroSystems, which makes fuselages and other parts on the 737 Max, said it would cut an initial 2,800 jobs because of the grounding. About half of Spirit's revenue comes from the planes. After the layoffs, Moody's Investors Service downgraded the company's credit to junk territory and said the cuts were "credit negative" for the city of Wichita and surrounding Sedgwick County.

General Electric, which makes the Max's engines through a joint venture with France's Safran, has laid off 70 temporary workers in Quebec, but it could hire them back later. GE also makes engines for Airbus planes and can shift workers to other plants and programs and reduce overtime, according to a person familiar with the matter.

It wasn't the first time Trump has criticized Boeing. In December 2016, weeks before he took office, Trump tweeted that the price of Boeing's new Air Force One contract, was too expensive and threatened to "cancel order!"

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