Boeing to cut 777 production to 5 a month
Due to a decrease in demand, American plane manufacturer Boeing announced cutting the production of one of its cash cows – the 777 – to five aircraft per month instead of seven. This decision will come in plane in August 2017 and will definitely lead to job cuts, as was announced to the company’s employees.
“Market demand drives production rates both to the upside and the downside. And the market is signaling near-term hesitation in some regions,” said the message that Boeing factory workers received on the 12th of December.
According to Paul Bergman, Boeing’s spokesperson, interviewed by Bloomberg, a slower pace will lead to lower revenue from the model. The 777 is second only to the 737 in terms of profit.
The company received only 17 net orders for the 777 in 2016, which is no near the figure needed to support the assembly line in Everett, Washington. With the market over-saturated with second-hand Airbus A330 and Boeing aircraft, the demand for new planes dropped accordingly. Airlines that enjoy lower fuel prices have less incentive to phase out middle-aged planes and change them with more expensive, albeit fuel-efficient aircraft.
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