Boeing Co said it plans to cut its monthly 737 aircraft production by nearly 20 per cent in the wake of two deadly crashes, signalling it does not expect aviation authorities to allow the plane back in the air anytime soon.
Deliveries of Boeing’s best-selling aircraft were frozen after a global grounding of the narrowbody model following the crash of an Ethiopian Airlines jet on March 10, killing all 157 people onboard.
Production will be cut to 42 aeroplanes per month from 52 starting mid-April. U.S. and airline officials said they now believe the plane could be grounded for at least two months, but an even longer grounding is a serious possibility.
The crash in Ethiopia and the crash of a Lion Air plane in Indonesia last October that killed all 189 people on board have left the world’s largest planemaker in crisis.
Chief Executive Officer Dennis Muilenburg said the company now knows that a chain of events caused both disasters, with erroneous activation of so-called MCAS anti-stall software “a common link” between the two. Boeing said it would not reduce jobs at the new production rate and will work to minimize the financial impact.
The company’s board will establish a committee to review how the company designs and develops
Boeing said it continues to make progress on a 737 MAX software update to prevent further accidents. Shares in Boeing Co fell around two percent after the market closed on Friday. While the number of 737 MAX planes grounded is just over 370, nearly 5,000 more are on order.
Boeing faces logistical issues in finding places to park the growing number of planes as well as being responsible for all their maintenance costs since it has been unable to deliver the jets to customers.