Boeing cuts 737 production rate by 10 planes per month

Boeing announced on Friday it would cut the production schedule of its 737 aircraft line following the two recent crashes that have seen the 737 MAX grounded worldwide.

The aerospace giant plans to trim production to 42 planes per month, down from 52 per month, starting in mid-April. Boeing shares tumbled after the disclosure, which was released just after the closing bell on Wall Street.

Boeing also announced it was establishing an advisory panel to review its company-wide policies for designing and developing planes.

The Federal Aviation Administration earlier this week said more work was needed before the aerospace giant could even submit a proposed fix that is believed to be a factor in the disasters.

Chief Executive Dennis Muilenburg described the production cut as temporary and said it would not affect current employment levels for the 737 and related programmes.

“We are coordinating closely with our customers as we work through plans to mitigate the impact of this adjustment,” Muilenburg said in a statement.

“We will also work directly with our suppliers on their production plans to minimise operational disruption and financial impact of the production rate change.”

Boeing has continued to manufacture 737s since the March 10 Ethiopian Airlines crash killed 157 people, the second deadly crash in five months after an October 2018 Lion Air crash killed 189 people.

However, Boeing has been unable to make deliveries of the planes to customers, a key stoppage that will dent revenues. Boeing is scheduled to report first-quarter results on April 24.

On Thursday, an initial report by the Ethiopia Transport Ministry found that the crew of the doomed plane repeatedly followed procedures recommended by Boeing, confirming concerns about the flight control system on the plane.

Scrutiny has centred on the plane's anti-stall system, Maneuvering Characteristics Augmentation System, which is believed to be at least partly at fault.

The Washington Post on Thursday that US regulators had ordered Boeing to fix a second flight-control problem, not related to MCAS, but which officials nevertheless deemed critical to flight safety.

The head of the FAA faced tough questioning from a Senate panel last month.

Top Boeing officials are expected at a follow-up hearing that could also be contentious.

Boeing said the new advisory panel will be led by retired US Navy Admiral Edmund Giambastiani, former vice chairman of the US Joint Chiefs of Staff.

“The committee will confirm the effectiveness of our policies and processes for assuring the highest level of safety on the 737 MAX programme, as well as our other airplane programmes, and recommend improvements to our policies and procedures,” Muilenburg said.

“Safety is our responsibility and we own it.”

Shares of Boeing fell 2.3 per cent to $382.92 in after-hours trading.