A production halt will help Boeing conserve cash flow. To date, the company has announced some $5.6bn in charges related to the crisis. © Getty Images

Fool me once, shame on you. Fool me twice, shame on me. Fool me three times, then what?

Boeing investors may not want to stick around to find out. The US aerospace group, financially and reputationally battered by the 737 Max crisis, dropped another bombshell on Monday: it plans to halt production of the troubled aircraft temporarily, starting in January.

Just two months ago, Boeing expressed confidence that the 737 Max, grounded since March after two crashes killed 346 people, will be cleared to fly again this year. Lex was sceptical. Repeatedly, Boeing has promised an unrealistic schedule for the 737’s return to service. That raises questions over the credibility of Boeing’s management. At the very least, it badly misjudged the extent of the public and regulatory backlash it faces.

Financially, the assembly line freeze makes sense. There would always be a limit to how many undelivered planes Boeing could keep; 400 are already in storage. Adding more creates an additional logistical challenge.

A production halt will help Boeing conserve cash flow. To date, the company has announced some $5.6bn in charges related to the crisis. Jefferies reckons the company burns through $4.4bn in cash for each quarter the 737 Max remains grounded. Shutting down production would save about half that amount, protecting its dividend.

But many unknowns cloud Boeing’s future. It gave no details on the length of the suspension. It is not clear whether Boeing will pay suppliers to continue their production or whether they will suspend activity as well. Though Boeing said this decision would harm its suppliers the least, share prices of these parts makers fell on Tuesday.

As one of America’s largest industrial exporters, the production halt will ripple through the broader US economy. With the 2020 elections approaching, chief executive Dennis Muilenburg could find himself the topic of discussion. Expect the calls for Mr Muilenburg’s resignation to get louder.

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