The cockpit of a grounded Lion Air Boeing Co. 737 Max 8 aircraft. (Bloomberg photo by Dimas Ardian)

Boeing cutting production rate of troubled 737 Max jet

Boeing faces a growing number of lawsuits filed by families of the victims

Boeing will cut production of its troubled 737 Max airliner this month, underscoring the growing financial risk it faces the longer that its bestselling plane remains grounded after two deadly crashes.

The company said Friday that starting in mid-April it will cut production of the plane to 42 from 52 planes per month so it can focus its attention on fixing the flight-control software that has been implicated in the crashes.

The move was not a complete surprise. Boeing had already suspended deliveries of the Max last month after regulators around the world grounded the jet.

Preliminary reports into accidents in Indonesia and Ethiopia found that faulty sensor readings erroneously triggered an anti-stall system that pushed the plane’s nose down. Pilots of each plane struggled in vain to regain control over the automated system.

In all, 346 people died in the crashes. Boeing faces a growing number of lawsuits filed by families of the victims.

Boeing also announced it is creating a special board committee to review airplane design and development.

READ MORE: Canada bans Boeing 737 Max 8 plane following fatal Ethiopian crash

The announcement to cut production comes after Boeing acknowledged that a second software issue has emerged that needs fixing on the Max — a discovery that explained why the aircraft maker had pushed back its ambitious schedule for getting the planes back in the air.

A Boeing spokesman called it a “relatively minor issue” and said the plane maker already has a fix in the works. He said the latest issue is not part of flight-control software called MCAS that Boeing has been working to upgrade since the first crash.

Chairman and CEO Dennis Muilenburg described the production cut as temporary and a response to the suspension of Max deliveries.

Boeing has delivered fewer than 400 Max jets but has a backlog of more than 4,600 unfilled orders. The Chicago-based company had hoped to expand Max production this year to 57 planes a month.

Indonesia’s Garuda Airlines has said it will cancel an order for 49 Max jets. Other airlines, including Lion Air, whose Max 8 crashed off the coast of Indonesia on Oct. 29, have raised the possibility of cancelling.

A Boeing official said Friday’s announcement about cutting production was not due to potential cancellations. The official spoke on condition of anonymity because Boeing does not publicly discuss those details.

In a statement, Muilenburg said the reduction was designed 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.

Analysts say the absence of deliveries will eat into Boeing’s cash flow because it gets most of the cost of a plane upon delivery.

Boeing declined to provide figures, but undelivered Max jets have been stacking up at its Renton, Washington, assembly plant.

Airlines that operate the Max will be squeezed the longer the planes are grounded, particularly if the interruption extends into the peak summer travel season.

They could buy used 737s, but that would be costly because the comparably sized Boeing 737-800 was very popular and in short supply even before the Max problems, according to Jim Williams, publisher of Airfax, a newsletter that tracks transactions involving commercial aircraft.

Williams said that if the Max grounding appears likely to extend into summer it will cause airlines to explore short-term leases, which could push lease rates higher, something that airline analysts say is already happening.

Boeing shares closed at $391.93, down $3.93. In after-hours after news of the production cut, they slipped another $8.98, or 2.3%, to $382.85.

David Koenig, The Associated Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Flooding water at West Kelowna Tim Hortons closes lane on Highway 97

This story has been updated with more accurate information. Water flooding from… Continue reading

Albas to speak at Summerland Chamber luncheon

Event will be held at Summerland Arena Banquet Room on Tuesday, Feb. 11

Local businesses partner to support SOWINS

The Community Spoons invites people to help make soups the first Monday of the month

Kelowna grandmother scammed of $14,000 in phone scam

RCMP warn of Grandparent Scam in the Okanagan after December incident

RDOS budget videos available online

Budget must be completed by March 31

VIDEO: Mass coronavirus quarantines seen in China won’t happen in Canada, authorities say

‘If a case comes here, and it is probably … it will still be business as normal’

Campfires no longer permitted at Kelowna scout camp

City of Kelowna said they rejected Camp Dunlop’s fire permit due to stricter bylaws

Province’s oldest practising lawyer shares advice at her 100th birthday party

Firefighters bring Constance Isherwood a cake with 100 birthday candles

Vernon woman suing McDonald’s for spilled coffee

Woman seeking nearly $10K, says employee failed to put lid on properly

Okanagan team leads animal rescue efforts in Australia

Brad Pattison’s team arrived in Sydney on Monday

Vernon woman suing McDonald’s for spilled coffee

Woman seeking nearly $10K, says employee failed to put lid on properly

Diners’ health tax not catching on in B.C., restaurant group says

Small businesses look for options to cover employer health tax

Avalanche danger closes Highway 1 near Chase

The highway is closed in both directions east of Chase

B.C. comic wins judgment after club owner slaps cellphone out of his hands

Incident happened last summer when Garrett Clark was performing in Abbotsford

Most Read