Boeing (BOE, Chicago O'Hare) does not expect to suspend the production of B737 MAX aircraft due to a lack of storage space but could be forced to do so by additional regulatory requirements, the manufacturer said in a response to a US Securities and Exchange Commission (SEC) letter.

Responding to the SEC's request for clarification on a number of statements included in the manufacturer's half-yearly report for 2019, Boeing said that its "management does not expect 737 MAX order cancellations due to the grounding to have a material impact to revenues or earnings".

It added that so far, the grounding has resulted in an "insignificant number of cancellations". Boeing added that it was confident that it will be able to mitigate the effects "due to the size of 737 backlog and management’s ability to mitigate potential impacts by shifting planned customer delivery dates".

Despite warnings issued in July this year, Boeing has so far not halted the production of B737 MAX and highlighted that logistical challenges would not lead to such a decision.

"We do not expect that storage capacity would limit our ability to continue 737 MAX production. We are currently using available storage space in several locations in the State of Washington as well as San Antonio Lackland, Texas. We have additional available capacity, and we believe that we have access to adequate alternative sources of storage space if return to service is delayed beyond our current assumption," Boeing said.

However, the manufacturer added that further regulatory delays could lead to a slow-down or halt in production.

"The timing and conditions of 737 MAX return to service is the principal factor that could cause us to reduce our production rates or temporarily cease 737 MAX production. For example, significant additional regulatory requirements and/or delays in return to service beyond our current assumption could cause customers to cancel or defer orders, which could also cause us to reduce or temporarily cease 737 MAX production," it added.

Boeing also pointed out that while a potential halt in production could reduce the negative impact on its current cash flow, it would also lead to additional costs related to the resumption of production. As such, it would "reduce 737 program margins in the future".