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Boeing limits 737 production amid aftermath of panel blowout

Boeing is to limit production of 737 aircraft and burn through more cash than previously anticipated amid the aftermath of the Alaska Airlines panel blowout in January.

Chief financial officer Brian West told analysts that the company had made the decision to “constrain” production of the 737 to below 38 a month allowed under a limit from regulators.

“We’re deliberately going to slow to get this right and we’re the ones who made the decision to constrain rates on the 737 programme,” he said, adding that “we’ll feel the impact of that over the next several months.”

He added: “I think on the 737, the way I think about it is the first half, the rates will be lower, second half, they’re going to be higher. As we get towards that 38 per month and beyond 38 per month, will be up for the FAA [Federal Aviation Administration].”

West said: “The events of January the 5th in Alaska Airlines Flight 1282 and everything we’ve learned since, we acknowledge that we need to improve upon safety and quality and conformance. 

“For years, we prioritised the movement of the airplane through the factory over getting it done right and that’s got to change.”

He conceded that the limits are “going to impact revenue, earnings and cash flows both in the quarter and in the year”. 

West said: “And in the quarter, our free cash flow will be a usage of somewhere between $4 billion and $4.5 billion and that’s higher than we originally planned back in January.”

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