Boeing cuts 737 MAX output in wake of two deadly crashes

Boeing cuts 737 MAX output in wake of two deadly crashes

"At a production rate of 42 airplanes per month, the 737 programme and related production teams will maintain their current employment levels while we continue to invest in the broader health and quality of our production system and supply chain", he said.

The decision to reduce production comes on the back of Boeing's announcement that a second software issue has emerged that needs fixing on the Max.

Both crashes involved the 737 MAX 8, which has an automated system that pushes the plane's nose down when the possibility of an aerodynamic stall is detected.

A report from the Ethiopian authorities issued on Thursday said the pilots of flight ET302 "repeatedly" followed procedures recommended by Boeing before the crash. Boeing faces a growing number of lawsuits filed by families of the victims.

In all, 346 people died in the crashes.

"We're adjusting the 737 production system temporarily to accommodate the pause in MAX deliveries, allowing us to prioritise additional resources to focus on software certification and returning the MAX to flight", the statement by Chief Executive Officer Dennis Muilenburg said.

Ethiopian Airlines, which has a pending order for 25 737-MAX aircraft, is reported to be reconsidering the deal.

The company's board will establish a committee to review how the company designs and develops airplanes, Muilenburg said. The production slowdown is a significant turn of events considering that in February the OEM was looking to raise MAX production rate to 57 aircraft a month this summer.

The same type flown by the Indonesian airline Lion Air crashed into the sea only five months earlier, shortly after taking off from Jakarta.

A Boeing official said Friday's announcement about cutting production was not due to potential cancellations. In a statement, he said the reduction was created to keep a healthy production system and maintain current employment in effect, slowing down production now to avoid a deeper cut later, if fixing the plane takes longer than expected.

The company has already suspended deliveries of the aircraft after regulators around the world grounded the 737 Max planes in fleets under their jurisdiction.

Analysts say the absence of deliveries will eat into Boeing's cash flow as the company gets most of the cost of a plane upon delivery.

Shares in Boeing Co fell around two percent after the market closed on Friday. In after-hours after news of the production cut, they slipped another USD8.98, or 2.3 per cent, to USD382.85.

Related Articles