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 US pre-market trading.
Boeing Co said late on Friday it planned to cut its monthly 737 aircraft production by nearly 20 percent after two deadly crashes, signalling 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 towards 57 per month through 2019," wrote analysts at brokerage Jefferies.
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.
Production will be cut to 42 airplanes per month from 52 starting in mid-April, the company said in a statement, without giving an end date.
Investment bank Cowen said Boeing's decision to cut the production of the 737 was the right thing to do.
"The 737 rate cut to 42/month should help resolve the MAX crisis but with a large 2019 cash hit," wrote Cowen in a note.
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
Colombia reports first virus cases in indigenous people
US proposes Venezuela transition government
US to build hundreds of temporary wards
Republicans wary as Trump pushes infrastructure plan
Hospital ship sails into New York
Coronavirus is mutating and now has eight strains
ELN rebels declare virus ceasefire after UN plea
Facebook offers $100 mn to help virus-hit news media
Fauci fears 200,000 deaths in US alone