Slow sales push Boeing to further cut 777 production

Boeing is again lowering the production rate on its 777 jetliner.

The aerospace giant on Monday told employees that sales for the 777 have slowed to the point it won’t be able to sustain the current production rate of 8.3 airplanes a month up to the point it’s ready for full production of the 777X, Boeing’s next generation 777.

So in August, it will lower the rate to five airplanes a month, according to a Boeing spokesman and an e-mail to employees in Washington.

“Market demand drives production rates both to the upside and the downside,” Elizabeth Lund, Boeing vice president and general manager of the 777, wrote in the e-mail to employees. “And the market is signaling near-term hesitation in some regions. Despite tireless work by the Sales team, orders have slowed.”

Officials from Spirit AeroSystems – which manufactures the 777’s forward fuselage, nacelles and struts – weren’t certain what impact, if any, there would be on the company. It’s also preparing for higher rate increases next year on the 737 and a slight one on the 767.

“Spirit has a strong history of supporting rate fluctuations both increasing and decreasing rates,” the company said in an e-mailed statement. “Spirit will be working with our customer during this 777 transition. It’s too soon to say if there will be an employment impact.”

Wide-body airplane orders have been showing signs of slowing for Airbus and Boeing over the past year, leading analysts to expect additional rate cuts on the 777. Boeing announced in January that it would cut its 777 rate to seven airplanes a month in 2017.

Lund said in her message that Boeing’s contract with Iran Air for 15 777-300ERs and 15 777Xs had no effect on the rate cut decision. Boeing’s first scheduled delivery of the 777X is in 2020.

This story was originally published December 12, 2016 at 6:01 PM with the headline "Slow sales push Boeing to further cut 777 production."