Coverage: Boeing is cutting 737 Max production

Boeing Co. is cutting production of 737 Max jets as the company moves quickly to finalize a fix that will get the grounded aircraft flying again.

Phil LeBeau of CNBC had the news:

Boeing’s monthly production of the aircraft, involved in two crashes since October, is dropping by 20 percent from the current level of 52 a month to 42 a month, the company said Friday.

“We’re adjusting the 737 production system temporarily to accommodate the pause in MAX deliveries, allowing us to prioritize additional resources to focus on software certification and returning the MAX to flight,” Boeing Chairman and CEO Dennis Muilenburg said in a statement announcing the rate cut. Muilenburg said the aerospace giant is already working with suppliers to, “minimize operational disruption and financial impact of the production rate change.”

The production cut is likely to weigh on shares of Boeing which have held up relatively well after initially dropping more than 10% in mid-March after the crash of an Ethiopian Airlines 737 Max 8. It was the second crash of a 737 Max in the last six months and led countries around the world to ground the airplane or ban it from flying in their airspace.

Doug Cameron of The Wall Street Journal reported that Boeing’s stock price fell on the news:

Shares in Boeing fell more than 2% to $382.90 after hours on Friday following the announcement, valuing the company at $216 billion. Investors have wiped more than $25 billion from Boeing’s market value since last month’s fatal crash of an Ethiopian Airlines 737 MAX, the second in five months involving the jetliner.

Regulators are probing those incidents, and Boeing is proposing a software fix and additional pilot training to address a flight-control problem implicated in both crashes. A return to flight and resumption of deliveries for the 737 MAX is expected to be months rather than weeks away, analysts have said.

“We’re adjusting the 737 production system temporarily to accommodate the pause in MAX deliveries, allowing us to prioritize additional resources to focus on software certification and returning the MAX to flight,” Chief Executive Dennis Muilenburg said in a statement.

Earlier Friday Boeing said it has identified a second software problemthat must be resolved as part of an overall fix for its anti-stall system to get 737 MAX airliners flying again.

David Koenig of the Associated Press reported that a new Boeing committee will review design and development:

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

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.