Boeing cuts production target to 787, citing pandemic and slower deliveries

Boeing has further reduced its production target for 787 Dreamliner production to five per month in mid-2021, from six as demand for international travel suffers from the coronavirus pandemic, CFO Greg Smith said on Friday.

International passenger traffic is about 90% lower than last year, Smith told a Credit Suisse investor conference, impacting “short-term aggregate demand for large aircraft markets “.

Boeing shares were down more than 2% in afternoon trading while the S&P 500 rose 0.7%.

The planes are used on long-haul international routes, which analysts and members of the industry expect to be the last to recover due to the virus and a host of travel restrictions.

Dreamliners deliveries are also slower than expected due to inspections resulting from production issues, revealed by Boeing in September.

“The extra time we take to inspect and ensure that each of our 787s is delivered to the highest quality standards has taken longer than expected,” said Smith. The manufacturer did not deliver any 787s in November and the inspection process “will continue to slow deliveries in December”.

In October, Smith said in a earnings call that Boeing expects a “significant fourth quarter on deliveries” of the 787.

The 787 issues come as Boeing impatient to resume deliveries of its beleaguered 737 Max aircraft. Airlines and other customers pay most of the price of the aircraft upon delivery. Last month, the Federal Aviation Administration lifted the grounding of planes implemented in March 2019 following two fatal crashes after Boeing made several safety upgrades.

Boeing received a boost from low-budget European carrier Ryanair on Thursday when it announced it was purchasing 75 additional Max jets in addition to the 135 already on order.

Airlines with Max planes in their fleets are getting to work convincing travelers that jets are safe. American Airlines is expected to be the first U.S. airline to fly the planes commercially from December 29. This week, the airline flew reporters on the jets and showed how it prepared them for service in hopes of building confidence on the plane.