Boeing to cut production of 737 MAX jets starting from mid-April

Boeing is cutting production of its 737 Max jets by 20 percent from 52 every month to 42 per month.

CEO Dennis Muilenburg said the company is diverting resources to fixing the software many suspect to have contributed to two fatal crashes since October.

Boeing’s shares fell in after-market trading Friday.

Boeing is cutting production of 737 Max jets as the company moves rapidly to finish a fix that will get the grounded aircraft flying again.

Boeing’s month to month production of the aircraft, associated with two crashes since October, is dropping by 20 percent from the present dimension of 52 every month to 42 per month, the company said Friday.

“We’re adjusting the 737 production system temporarily to accommodate the pause in MAX deliveries, allowing us to prioritize additional resources to focus on software certification and returning the MAX to flight,” Boeing Chairman and CEO Dennis Muilenburg said in a statement announcing the rate cut. Muilenburg said the aerospace giant is already working with suppliers to, “minimize operational disruption and financial impact of the production rate change.”

The production cut is probably going to burden on shares of Boeing which have held up moderately well after at first dropping over 10% in mid-March after the crash of an Ethiopian Airlines 737 Max 8. It was the second crash of a 737 Max over the most recent a half year and drove nations around the globe to ground the plane or restriction it from flying in their airspace.

Boeing’s shares were down 2.3% in after-hours trading Friday.

The FAA, after at first calling the plane “airworthy,” joined the remainder of the world on March 13 in grounding the Max.

At the time, Boeing said it had no plans to cut production and many analysts agreed with the decision. Jose Caiado, airline analyst at Credit Suisse, said in mid-March that he expected Boeing to keep the assembly lines rolling at current levels so it didn’t disrupt supply chains.

“They will just have to carry that inventory on their balance sheet a little while longer,” he told CNBC.

Boeing says it wants to have a software fix for the 737 Max in the coming weeks that it will submit to the FAA and international regulators for approval. Their audit and a potential confirmation could take a few additional weeks, even months, which means the 737 Max could be grounded well into June, if not later. Subsequently, Boeing has chosen it is more brilliant to roll fewer 737s out of its plant in Renton, Washington.

Separately, Muilenburg says the Boeing board of directors has formed a committee to “review our company-wide policies and processes for the design and development of the airplanes we build.”