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.

Just Posted

South Surrey mom optimistic changes ahead for recovery homes

Maggie Plett met with Min. Judy Darcy Thursday

Surrey lotto winner plans to spoil his kids

Attila Kelemen won $500K in the Daily Grand draw, held on July 8

Uphill battle for Cloverdale cyclist, 64, and her daughters in Cypress Challenge charity ride

Robyn Wells has lost both of her parents and two uncles to pancreatic cancer

Surrey mayor dissolves public safety committee, creates one for police transition

Locke slams the move, saying who McCallum appoints to the committee will be ‘a very large tell’

Canadian national softball team wins second straight Canada Cup

Team Canada defeats Texas-based Scrapyard International in gold-medal game Sunday in South Surrey

‘Bad choices make good stories’: Margaret Trudeau brings her show to Just for Laughs

Trudeau says over the decades she has been suicidal, manic, depressed

UPDATE: Youth seen with gun at Nanaimo mall, suspect now in custody

Woodgrove Centre shut down during police incident

B.C. man dies from rabies after contact with Vancouver Island bat

Last known case of human rabies in B.C. was 16 years ago

Crown recommends up to two-year jail term for former Bountiful leader

Crown says sentence range should be 18 months to two years for Bountiful child removal case

B.C.-wide police efforts identify Vancouver Island robbery suspect

Warrant issued for arrest of North Vancouver man for TD Bank robbery

VIDEO: Wolf spotted swimming ashore on northern Vancouver Island

Island wolf population estimated at under 150 in 2008, says VI-Wilds

Diversity a Canadian strength, Trudeau says of Trump tweets at congresswomen

Trudeau avoided using Trump’s name when he was asked about the president’s Twitter comments

B.C. couple bring son home from Nigeria after long adoption delay

Kim and Clark Moran of Abbotsford spent almost a year waiting to finalize adoption of Ayo, 3

Garneau ‘disappointed’ in airlines’ move against new passenger bill of rights

New rules codified compensation for lost luggage, overbooked flights

Most Read

l -->