Aerospace & Defense

Coronavirus brings Boeing's US airplane production to a halt

Key Points
  • Boeing said it will temporarily shut down production at its 787 facilities in South Carolina after the governor issued a stay-at-home order because of the coronavirus.
  • Boeing had already suspended production at facilities in the Seattle area and Monday's move means its entire commercial airplane production is on pause.
  • Coronavirus is a new challenge for Boeing, which was already hamstrung by the fallout from two fatal crashes of the 737 Max.
Boeing Dreamliner 787 Air China planes sit on the production line at the company's final assembly facility in North Charleston, South Carolina.
Travis Dove | Bloomberg | Getty Images

Boeing on Monday said it will suspend production of 787 Dreamliner planes in South Carolina because of the coronavirus pandemic, a move that puts all of the manufacturer's production of commercial airplanes on hold.

The announcement came after South Carolina Gov. Henry McMaster ordered most residents to stay at home except for certain activities such as buying essential goods or visiting family.

Boeing on Sunday said it will indefinitely extend a shutdown of commercial airplane factories in the Seattle area — home to the bulk of its production — because of the virus, which has infected around 100 of the company's employees, according to a spokesman. Boeing employs about 160,000 people.

Boeing said that staff who cannot work remotely will be paid for 10 days of work and that they can file for unemployment benefits or use paid time off, adding that benefits will continue "as normal" during the pause. The South Carolina operation is one of the two sites that make Boeing's wide-body Dreamliner jets.

Coronavirus is a new crisis for the manufacturer that was already struggling with the fallout from two fatal crashes of its 737 Max planes. The pandemic has devastated air travel demand and Boeing's airline customers are parking hundreds of planes and deferring orders of others, setting up Boeing and its European rival Airbus for months of weak demand.

"It is our commitment to focus on the health and safety of our teammates while assessing the spread of the virus across the state, its impact on the reliability of our global supply chain and that ripple effect on the 787 program," Brad Zaback, general manager of the 787 program, said in a release.

Demand for the 787 planes, which are used on some of the world's longest routes, are particularly challenged now with severe curbs on international travel and paltry demand.

The segment was facing headwinds before the pandemic, however, because of global trade tensions.

Boeing in January said it planned to reduce production of the 787 Dreamliner planes to 10 a month, from 12 a month, which itself was a reduced rate. CFO Greg Smith said on an earnings call in January that the "global trade environment has presented challenges for our wide-body production plans.

Boeing shares were down 2% in extended trading.

Boeing offering voluntary layoff packages for employees
Boeing offering voluntary layoff packages for employees