The planemaker's internal overhead and labor expenses will remain and fuel cash burn, analyst Seth Seifman wrote to clients.
Boeing will still burn more than $1 billion a month even after halting 737 Max production, according to J.P. Morgan analysis.
"We estimate that Boeing is burning nearly $2 bn per month on the MAX but this will not drop to zero during the halt," analyst Seth Seifman writes. Boeing's decision to stop building the troubled aircraft was made in light of months of cash-draining groundings worldwide, but the company's internal overhead and labor expenses will remain and fuel cash burn, analyst Seth Seifman wrote to clients.
"We estimate that Boeing is burning nearly $2 bn per month on the MAX but this will not drop to zero during the halt," the J.P. Morgan analyst wrote. "We expect Boeing to support suppliers, which comprise ~65% of the 737 cost base, in order to preserve labor and production capabilities. For now, we assume ~50% of supply chain costs hang around, resulting inmonthly cash burn that is still solidly > $1 bn.
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