Boeing to cut 737 Max aircraft production by nearly 20%

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Boeing Boeing to cut 737 Max aircraft production by nearly 20%

Only 42 aircraft to be made per month in bid to manage inventory after two fatal crashes

Dennis Muilenburg, centre, chief executive of Boeing, said the company now knows that a chain of events caused both disasters. Photograph: Ben Stansall/AFP/Getty

Boeing plans to cut its monthly 737 production by nearly 20% as it works to manage the grounding of its Max aircraft in the wake of two deadly crashes, Dennis Muilenburg, its chief executive, said on Friday.

Deliveries of Boeing’s best-selling aircraft were frozen after a global grounding of the narrow-body model following the crash of an Ethiopian Airlines jet on 10 March that killed all 157 people onboard.

Starting mid-April, production will be cut to 42 aircraft per month from 52, the company said in a statement.

The crash of a Lion Air plane in Indonesia last October that killed all 189 people on board and the Ethiopian tragedy have left the world’s largest aircraft manufacturer in crisis.

Muilenburg said the company now knows that a chain of events caused both disasters, with erroneous autopilot 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 minimise the financial impact.

Boeing’s board will establish a committee to review how the company designs and develops aircraft, Muilenburg added. The group will “recommend improvements to our policies and procedures” for its 737 Max and other aircraft programmes.

Boeing said it continues to make progress on a 737 Max software update to prevent further accidents. Shares in Boeing Co fell around 1% after the market closed on Friday.

Boeing faces logistical issues in finding places to park the growing number of grounded 737 Max planes as well as being responsible for all their maintenance costs since it has been unable to deliver the jets to customers, two people briefed on the situation said.

Manufacturers avoid halting and then resuming production as this disrupts supply chains. Boeing had been planning to speed up production again in June to 57 a month. Having to hold planes in storage without delivering them consumes extra cash through increased inventory.

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