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Two Crashes Involving 737 MAX Forces Boeing To Cut Its Production

Two Crashes Involving 737 MAX Forces Boeing To Cut Its Production
The 737 MAX has been the best selling model of Boeing but it has been grounded across the world following two deadly crashes which has put the model at financial risk which probably pushed the company to announce a production cut for the planes this month.
With the aim of focusing more on addressing the issues of the flight-control software that has been implicated in the crashes, the company would cut down its monthly production of the crafts to 42 from 52 starting in mid-April, the company said.
This measure has not surprised experts and analysts because delivery of the crafts had already been suspended last month following the grounding of the flights globally. Initial investigations reports in the accidents involving the 737 MAX in Indonesia and Ethiopia pointed towards faults with the sensor readings which had accidentally activated an anti-stall system which pushed down the nose of the plane potentially resulting in the crashes. There were issues for the pilots of both the crafts to regain control over the automated system.
A total of 346 passengers died in the crashes and the potential for an increasing number of lawsuits filed by families of the victims is staring at the face of Boeing. On its part, a special board committee to review the designing and development of jetliners was announced by Boeing.
Earlier, before announcing the cuts in production, Boeing had also conceded of the detection of a second issue in the MAX for which the company needs to create a fix. Discovery of this new flaw is potentially the reason why the US plane maker had gone back on its initial plan to getting the 737 Max planes back in the air sooner.
It was described as a "relatively minor issue" by a Boeing spokesman and added that Boeing was already working on a solution to address the issue. The latest problem in the craft was not related to the flight-control software called MCAS, for which the company has been trying to upgrade since the crash, he said.  
The production was described to be as temporary response to the suspension of MAX deliveries by Boeing Chairman and chief executive Dennis Muilenburg.
Following the Ethiopian Airlines crash most countries have either grounded or banned flight of the 737 MAX.
Boeing so far has a total delivery backlog of 4,600 unfilled orders and the company has delivered less than 400 MAX jets. Earlier in the year, Boeing had announced its intention to increase the monthly production of the 737 Max to 57 planes this year.
Orders for 737 MAX would be cancelled by Indonesia's Garuda Airlines while other airlines — including Lion Air, whose MAX 8 crashed off the coast of Indonesia in October last year, have also expressed possibilities of cancellation of orders.
The decision to reduce production was aimed to maintain a healthy production system and maintain current employment, said Muilenburg in a statement. Experts say that the decision by the plane maker was made to reduce production now so that it would be able to avoid a deeper cut later in case of the requirement of extension of time for fixing the plane.
Since Boeing gets most of the costs of making a plane when it is delivered, therefore the cancellation or delay of deliveries would impact the cash flow of the company, analysts said.

Christopher J. Mitchell

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