Boeing shares plunge over downgrade due to 737 Max production delays

Irving Hamilton
April 10, 2019

The Texas-based airline, that previously canceled some of its flights until the end of April 2019, said it would "contact affected customers directly by email or telephone" for rebooking.

Starting in mid-April, Boeing said, it will cut production of the plane to 42 from 52 planes per month so it can focus on fixing the flight-control software that has been implicated in the two crashes.

The ongoing disruption in air travel comes as Boeing apologized last week for the fatal crashes of two MAX 8 aircraft in recent months-last month's Ethiopian Airlines Flight 302 and Indonesia's Lion Air Flight 610 in October-which together killed almost 350 people.

American, the world's largest airline, said Sunday it will cancel about 90 flights daily through June 5.

A preliminary report released last Thursday by the Ethiopian Ministry of Transport's Aircraft Accident Investigation Bureau revealed that the American-made aircraft had a valid certificate of airworthiness, the crew were licensed and qualified to conduct the flight and the plane's takeoff appeared normal.

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The Wall Street firm slashed its rating for shares of the low cost carrier to market perform from outperform on Monday, saying that the grounding of 737 Max planes could make it harder for Southwest to retire its fleet of 737-700s as planned. The same Boeing model was involved in a Lion Air plane crash in Indonesia in October that killed 189 people. In 2013, the aircraft manufacturer paid an undisclosed amount to airlines in response to the grounding of Boeing 787 Dreamliner aircraft.

The Max came under scrutiny following two crashes in the span of about five months involving Lion Air and Ethiopian Airlines. Jefferies expects Boeing to deliver 497 737 MAX planes, down from 580. "We have the responsibility to eliminate this risk, and we know how to do it".

Boeing's decision to cut the production of its 737 aircraft hit the shares of its suppliers on Monday, while its European rival Airbus rose.

"The history of our industry shows most accidents are caused by a chain of events", he wrote in his apology. As pilots have told us, erroneous activation of the MCAS function can add to what is already a high workload environment. But this underscores the fact that this is a process that can't be rushed, especially as worldwide regulators feel compelled to piggyback on the FAA with safety reviews of their own amid uncomfortable questions about whether the organization was too cozy with Boeing to catch and prevent these problems ahead of time.

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