Boeing cuts 737 MAX production after two fatal plane crashes

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The move was not a complete surprise. The company will instead turn its attention to fixing the glitches in the flight-control software of the narrow body aircraft series which had led to two deadly crashes. Efforts by pilots to regain control of the automated system failed to check the descent of the aircraft. The company has been facing several lawsuits filed by families of the victims who died in the two crashes.

Congress is looking at the connection between Boeing and the FAA after two recent fatal crashes.

Boeing said it would not reduce jobs at the new production rate and will work to minimize the financial impact.

A report from the Ethiopian authorities issued on Thursday said the pilots of flight ET302 "repeatedly" followed procedures recommended by Boeing before the crash.

"We're adjusting the 737 production system temporarily to accommodate the pause in MAX deliveries, allowing us to prioritise additional resources to focus on software certification and returning the MAX to flight", the statement by Chief Executive Officer Dennis Muilenburg said. "We have great confidence in Boeing and the 737 MAX and will continue our close coordination on this program".

The company also announced that a committee would be set up to review airplane design processes.

Boeing had been planning to speed up production in June to 57 a month.

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The crash in Ethiopia and the crash of a Lion Air plane in Indonesia last October that killed all 189 people on board have left the world's largest planemaker in crisis.

In a statement, Muilenburg said the reduction was created to keep a healthy production system and maintain current employment - in effect, slowing down production now to avoid a deeper cut later, if fixing the plane takes longer than expected.

Having to hold planes in storage without delivering them does, however, consume extra cash through increased inventory.

Boeing declined to provide figures, but undelivered Max jets have been stacking up at its Renton, Washington, assembly plant. According to Boeing representatives, the decision was made due to suspended deliveries of this aircraft type.

Williams said that if the Max grounding appears likely to extend into summer it will cause airlines to explore short-term leases, which could push lease rates higher, something that airline analysts said is already happening.

Shares in Boeing fell around 1% as the market closed on Friday.