Boeing said it will cut back production of its own 737 Max airliner underscoring the growing threat it faces the more that its best-selling plane remains grounded after the two crashes.
Researchers are analyzing the crashes which killed all 346 aboard the 737 Max 8 jets controlled by Indonesia's Lion Air and Ethiopian Airlines, including the part of a flight-control method named MCAS, which under certain circumstances could mechanically turn the airplane's nose down to prevent a aerodynamic stall.
The stock plunged as much as 5 percent to a low of 371.86 USA dollars apiece during the session, before closing down 4.4 percent at 374.52 dollars per share, the biggest drag on the Dow.
Boeing Co is now unlikely to deliver more than 500 of its 737 MAX planes to customers this year, and even that will depend on a swift removal of an effective halt in deliveries after June, Wall Street analysts said on Monday.
"The 737 delay could last longer than previously expected", wrote Bank of America analyst Ronald Epstein in a note to investors Monday, in which he downgraded his recommendation on the stock.
Bickers said there is no time frame for when the lowered production will end, but Boeing is working with suppliers across the board to reduce negative effects. "If the production drop lasts 3-6 months, then this implies a relatively minor US$150 million to US$250 million sales impact". This flight was from the Ethiopian airlines and the incident took place on March 10, 2019. There will be a hit to 2019 earnings due to fewer-than-anticipated deliveries.
Since it has paused deliveries of new planes, the company is stockpiling finished Boeing 737 MAXs in Renton factory.
"We have chose to temporarily move from a production rate of 52 airplanes per month to 42 airplanes per month starting in mid-April", CEO Dennis Muilenburg said in a statement Friday.
The fallout from Boeing's largest crisis in years is continuing. "He had a long life ahead of him and he was taken away from us too soon", Abdi said.
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. These announcements break with a tradition of accepting the certification of the company's home regulator, in this case the US Federal Aviation Administration.
Boeing is cutting its 737 Max production rate as the company works to return the plane to flight.
"Order cancellations from other airlines are possible but this could be driven more by their growth prospects and financial condition", S&P said.