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Boeing Co said late on Friday it planned to cut its monthly 737
aircraft production by nearly 20 percent after two deadly
crashes, signaling it does not expect aviation authorities to
allow the plane back in the air any time soon.
Boeing's decision knocked the shares of aerospace groups
involved in the 737, with Meggitt, Melrose and Safran all
falling by between 1 percent and 2.5 percent.
Boeing's shares were down by around 2.7 percent in pre-market
trading, while its woes lifted shares of European arch rival
Airbus by around 1 percent.
"If the lower rate endures through September 2019, the potential
loss of revenue to Meggitt is $8.525 million, perhaps somewhat
more as we figure the monthly 737 MAX production rate was likely
to rise toward 57 per month through 2019," wrote analysts at
brokerage Jefferies.
For a graphic on Suppliers after second Boeing crash, see -
https://tmsnrt.rs/2DeeqXZ
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, which killed all 157
people onboard.
Production will be cut to 42 airplanes per month from 52
starting in mid-April, the company said in a statement, without
giving an end date.
Investment bank Cowen said Boeing's decision to cut the
production of the 737 was the right thing to do.
"The 737 rate cut to 42/month should help resolve the MAX crisis
but with a large 2019 cash hit," wrote Cowen in a note.
For a graphic on Boeing shares after second fatal crash, see -
https://tmsnrt.rs/2D4i2vp
(Reporting by Sudip Kar-Gupta in Paris and Noor Zainab Hussain
in Bengaluru; Editing by Keith Weir and Kirsten Donovan)
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