PARIS (Reuters) – Shares of Boeing Co fell more than 4 percent on Monday morning after the company said it would cut production of its 737 MAX aircraft by nearly 20 percent, as the planemaker struggles with a worldwide grounding of the jets.
The production cut also weighed on shares of Boeing’s suppliers across the globe. Spirit AeroSystems fell 5 percent, while Triumph Group dropped 6 percent. European suppliers such as Meggitt, Melrose and Safran were down between 0.4 percent and 2 percent.
Deliveries of Boeing’s best-selling aircraft were frozen after the global grounding of the narrowbody model following the crash of an Ethiopian Airlines jet on March 10, which killed all 157 people onboard.
Production will be cut to 42 airplanes per month from 52 starting in mid-April, Boeing said on Friday, without giving an end date.
“The 737 rate cut to 42/month should help resolve the MAX crisis but with a large 2019 cash hit,” brokerage Cowen wrote in a note on Monday.
For a graphic on Suppliers after second Boeing crash, see – https://tmsnrt.rs/2DeeqXZ
Bank of America Merrill Lynch analysts cut Boeing’s rating to “neutral” from “buy” on Monday, saying the 737 delay could last longer than previously expected and estimated 6 to 9 months of disruption versus 3 to 6 months previously.
Including today’s losses, the grounding has so far wiped off about $26 billion from Boeing’s market value, making it one of the worst performers on the Dow this year.
For a graphic on Boeing shares after second fatal crash, see – https://tmsnrt.rs/2D4i2vp
(Reporting by Sudip Kar-Gupta in Paris and Noor Zainab Hussain and Arjun Panchadar in Bengaluru; Editing by Keith Weir, Kirsten Donovan and Sriraj Kalluvila)