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The Wichita-based parts manufacturer produces about 70% of the Max, including the fuselage, and makes more than $6 million per plane. More than half of Spirit’s earnings are tied to the program, and the company has laid off thousands of workers amid a restructuring program that was announced in the wake of COVID-19 and the single-aisle jetliner's grounding.
Southwest Airlines, which relied more heavily on the 737 Max than rival U.S. carriers, also benefits significantly, UBS said. While the decision is a huge win for Boeing itself, the Chicago-based company also draws revenue from sales of larger commercial jetliners and its military-contracting businesses.
Boeing's expansive backlog of Max orders “has been most negatively affected by the drop in demand as customers could cancel delinquent deliveries without penalty and that could continue,” wrote a team led by UBS analyst Myles Walton.
Boeing has garnered a total of 5,263 orders for the Max aircraft since its inception, with 4,102, or 78%, unfilled.
The 737 Max, which was grounded in March 2019 after two crashes killed all 346 people aboard, accounted for approximately 30% of Boeing’s 2018 sales.
The company expects to deliver roughly half of the pre-built planes in the first 12 months after its return to flight. Boeing has said it would deliver about 20 planes per month in 2021 and aims to ramp up output to 31 per month during the first quarter of 2022.
"We believe Boeing is focused on delivering as much of the inventory in the next few years and ideally can generate some order activity to help offset the perception that the Max has struggled in the market relative to the Airbus 320 family," wrote Ken Herbert, an analyst at Canaccord Genuity.
Boeing shares slumped 37% this year through Thursday, while Spirit AeroSystems and Southwest Airlines shares were off 55% and 15%, respectively. The S&P 500 was higher by 11%.