Boeing's stock price dropped 4.4 percent on Monday after the company's decision to cut production of the 737 MAX following two deadly plane crashes.
A Boeing Co. 737 MAX 9 jetliner sits on the production floor at the company's manufacturing facility in Renton, Washington, U.S. Photographer: David Ryder/Bloomberg By Aaron Gregg and Aaron Gregg Reporter covering the defense industry and government contractors. Email Bio Follow Thomas Heath Thomas Heath Local business reporter and columnist, writing about entrepreneurs and companies in the Washington metropolitan area Email Bio Follow April 8 at 6:17 PM Boeing’s stock price dropped by 4.
The company announced Friday after the market closed that it will trim its production rate for 737 Max jets from 52 to 42 planes a month, despite strong demand for them worldwide. Boeing has been unable to deliver the finished planes to customers since early March, when regulators across the world ordered that they be grounded indefinitely.
“We are taking proactive, measured steps to invest in the health of our production system and supply chain, best positioning us for the future,” Boeing chief executive Dennis Muilenburg said in a statement Friday. Cai von Rumohr, managing director at Cowen investment bank, has maintained a “buy” rating on Boeing with a price target of $460. But he reduced the price target from $475 after the Ethiopian crash.
The prominent credit ratings agency Moody’s kept its Boeing rating unchanged, noting that the company has more than enough cash on hand to sustain it in the short term. Boeing had about $8.5 billion on hand at the end of 2018.Moody’s senior vice president Mark Root said, however, that “cash flow pressures will mount” if the fleet is grounded longer than four months.
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