Boeing’s decision to cut production of its 737 aircraft hit the shares of its suppliers on Monday, while its own shares were lower in U.S. pre-market trading.
According to Reuters, Boeing Co said recently it planned to cut its monthly 737 aircraft production by nearly 20 percent after two deadly crashes, signaling it does not expect aviation authorities to allow the plane back in the air any time soon.
Boeing’s decision knocked the shares of aerospace groups involved in the 737, with Meggitt, Melrose and Safran all falling by between 1 percent and 2.5 percent.
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.
“If the lower rate endures through September 2019, the potential loss of revenue to Meggitt is $8.525 million, perhaps somewhat more as we figure the monthly 737 MAX production rate was likely to rise toward 57 per month through 2019,” wrote analysts at brokerage Jefferies.
For a graphic on Suppliers after second Boeing crash,
Deliveries of Boeing’s best-selling aircraft were frozen after a global grounding of the narrowbody model following the crash of an Ethiopian Airlines jet on March 10, which killed all 157 people onboard.
Oyedeyi Samson
