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Boeing to suspend production of grounded 737 MAX planes

Boeing Co. confirmed it is suspending production of its 737 MAX aircraft beginning January 2020, as clarity on the troubled model's return to service remained elusive.

The aircraft manufacturer said its decision is the "least disruptive" to its long-term production system and supply chain health. With the temporary suspension, the company said it will prioritize the delivery of the approximately 400 aircraft it has in storage.

Southwest Airlines Co. said Dec. 17 that it would extend 737 MAX flight cancellations by an additional five weeks through April 13, 2020, days after American Airlines Group Inc. announced that commercial 737 MAX flights were now due to resume April 7, 2020, nearly four weeks later than previously projected.

Steve Dickson, head of the Federal Aviation Administration, said earlier in December that it was unlikely for the 737 MAX to return to the skies before the end of the year as the certification process for the aircraft would extend into 2020. He reiterated that there is no set timeline for the flight certification for the planes, which have been grounded since March following two fatal crashes that were widely blamed on the model's flight control system.

Southwest Airlines expects to be compensated by Boeing for a portion of estimated financial damages in connection with the grounding.

Boeing said affected employees will either continue with 737-related work or be temporarily assigned to other teams.

Shares in Boeing closed down 4.3% at $327 on Dec. 16 on reports that a production halt was being considered. It was trading 1.4% lower at market open Dec. 17.

Further delays in 737 MAX deliveries are likely to increase compensation payouts to airlines affected by the grounding and affect the company's supply chains, Michael Hewson, chief market analyst at CMC Markets UK, wrote.