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Boeing Reduces Production Rate of 737 Max in Difficulty

CHICAGO – Boeing will reduce the production of its struggling 737 Max jetliner this month, highlighting the growing financial risk it faces longer than its best-selling aircraft remains on the ground after two fatal accidents, AP reported Saturday.
The company said Friday that by mid-April, it would reduce the production of its aircraft to 52 to a month, in order to focus its attention on the repair of the flight control software involved in crashes.
The move was not a total surprise, Boeing had already suspended Max’s deliveries last month after regulators around the world put the reactor to the ground.
Preliminary reports on accidents in Indonesia and Ethiopia revealed that erroneous sensor readings mistakenly triggered an anti-stall system that tilted the aircraft. The pilots of each plane struggled to regain control of the automated system.
In all, 346 people died in collisions. Boeing faces a growing number of lawsuits filed by the families of the victims.
Boeing also announced the creation of a special board committee to review aircraft design and development.
The announcement of the reduction in production came after Boeing had recognized that a second software problem had to be solved on the Max. This discovery explained why the manufacturer had rejected its ambitious program to revive the plane.
A spokesman for Boeing described the problem as a “relatively minor problem” and said the aircraft manufacturer already had a fix to fix. He added that the latest issue is not part of the flight control software called MCAS that Boeing has been trying to upgrade since the first accident.
President and Chief Executive Officer Dennis Muilenburg described the production cut as temporary and as a response to the suspension of Max’s deliveries.
Boeing has delivered less than 400 Max jets but has an order backlog of more than 4,600 orders in the backlog. The Chicago-based company hoped to increase Max’s output this year to 57 planes a month.
Indonesian airline Garuda Airlines has announced that it will cancel an order for 49 Max aircraft. Other airlines, including Lion Air, including the Max 8 crash off the Indonesian coast on Oct. 29, discussed the possibility of a cancellation.
A Boeing official said Friday’s announcement on the reduction in production was not due to potential cancellations. The official spoke on condition of anonymity because Boeing does not discuss these details publicly.
In a statement, Muilenburg said the reduction was aimed at maintaining a healthy production system and maintaining the current job. In fact, slow down production now to avoid further reduction later, if the repair of the aircraft takes longer than expected.
Analysts believe that the lack of deliveries will nibble Boeing’s cash flow as it absorbs most of the cost of an aircraft on delivery.
Boeing refused to provide figures, but the undelivered Max jets accumulated at its assembly plant in Renton, Washington.
The airlines that operate the Max will be squeezed, the more planes will be grounded, especially if the interruption is prolonged during the peak summer season.
They could buy used 737s, but it would be expensive because the Boeing 737-800, of comparable size, was very popular and already available even before the Max problem, according to Jim Williams, publisher of Airfax, a newsletter that follows the transactions involving commercial aircraft.
Mr. Williams said that if Max delays seemed to last until summer, airlines could consider short-term leases could increase rental rates, which, according to airline analysts, is already in progress.
Boeing shares closed at 391.93 dollars Friday, down 3.93 dollars. After the hours following the announcement of the production cut, they still lost $8.98, or 2.3%, to $ 382.85.
(Sahar News Monitoring Desk)

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