The Boeing Company will be cutting the production rate for the Boeing 777, one of its most profitable products, starting in August 2017.
The rate cut that was to be expected
Earlier this year the jet maker announced that it would be cutting rates for the Boeing 777 program from 100 per year to 84 aircraft per year in 2017. During its earnings call in October the US jet maker already hinted that it could be slashing production once again, but not by more than by 2 units per month.
The company is now dropping production to 5 aircraft per month starting in August.
As the program transitions towards the Boeing 777X the rate will drop to 3.5 units per month in 2018. With the cut the jet maker seems to be focusing on spreading out its backlog over a longer time frame and decrease focus somewhat on sales campaigns.
Shareholders of The Boeing Company have been eyeballing the jet’s planned production for months as it gives them an idea of cash flow growth. With the upcoming drop in 777 production, cash flow growth will need to come from higher narrow body production and cash flow improvements on the Boeing 787 program.