Boeing cuts production of 737 MAX after crashes

Shares of Boeing dropped sharply overnight after the US aircraft manufacturer announced it would be cutting the production of its 737 Max by almost a fifth after two of the models crashed.

The production cut also weighed on shares of Boeing’s suppliers across the globe such as Spirit AeroSystems, which fell 5% and Triumph Group, which dropped 6%.

European suppliers such as Meggitt, Melrose and Rolls Royce were also in red due to the production cut, which will mean the ripple effect within the aerospace and engineering will equate to fewer orders across the board.

The deliveries of the aircraft were frozen after the disastrous crash of an Ethiopian Airlines jet last month which killed the 157 people on board, coming not long after a Lion Air crash of a 737 MAX only weeks before.

Production will be cut to 42 airplanes per month from 52 starting in mid-April, Boeing said on Friday.

David Madden, an analyst at CMC Markets said on Monday: “Boeing shares are in the red after Bank of America cut its rating on the stock to neutral from buy, and the Wall Street titan trimmed its price target for the company to $420 from $480. The Ethiopian airlines disaster involving the Boeing 737 Max aircraft was the reason behind the downgrade”

Bank of American estimated delays with the 737 will last six to nine months, longer than the three- to six-month delay originally forecast.