Today, Boeing Co announced it plans to cut its monthly 737 aircraft production by almost 20 percent in the aftermath of two deadly crashes. It signalled that it does not expect aviation authorities to allow the plane to be back in the air anytime soon.
The deliveries of the best-selling aircraft of Boeing were suspended after a global grounding of the narrowbody model after the crash of an Ethiopian Airlines jet on the 10th of March, killing all of the 157 passengers onboard.
In a statement, the company said that the production will be reduced to 42 aeroplanes per month from 52 starting mid-April, however, it did not disclose an end-date.
Some U.S. and airline officials said that they now believe that the plane could be grounded for at least two months, however, an even longer grounding can be a serious possibility.
The crash of the Ethiopian Airlines jet and the crash of a Lion Air plane in Indonesia last October that killed all of the 189 passengers on board have left the largest planemaker in the world in crisis.
Today, Dennis Muilenburg, the Chief Executive Officer of the company, said that Boeing is now aware that a chain of events caused both disasters, with erroneous activation of the so-called MCAS anti-stall software being “a common link” between the two.
The planemaker said that it would not reduce the jobs at the new production rate and that it will strive to minimize the financial impact.
Muilenburg said that Boeing’s board will organise a committee to review how the firm designs and develops aeroplanes. The group will be tasked to “recommend improvements to our policies and procedures” for its 737 MAX and some other aeroplane programs.
Boeing said that it continues to make progress on a software update for the 737 MAX to prevent further accidents.
The shares in Boeing Co dropped by approximately two percent after the market closed today. While the number of 737 MAX planes grounded is just over 370, almost 5,000 more are on order.
Two people briefed on the situation said that Boeing is experiencing some logistical issues in looking for places to park the increasing number of planes as well as being responsible for all their maintenance costs since it has not been able to deliver the jets to its customers.