As the world’s largest plane maker, Boeing (NYSE:BA) makes a lot of airplanes — but not all airplanes are created equal.
From the smallish 737 to the jumbo-sized 747 and (perhaps confusingly) highest-numbered but only mid-sized 787, the profitability of Boeing stock depends in part on the number of planes it produces, but also on the profitability of each individual plane model produced. Management tells us that out of all the planes it builds, Boeing’s 737 and 777 models are its real “profit drivers.”
And that’s why it’s so distressing to hear: Boeing is cutting 777 production.
Boeing’s beloved 777. Prepare to see fewer of them flying overhead. Image source: Getty Images.
The news
Last week, Boeing made the somewhat surprising announcement that it is slashing the production rate of its uber-profitable 777 airliner by about 40%. Currently, the plane maker is churning out 777s at the rate of 8.3 planes per month (PPM). It had already planned to cut that rate to seven planes per month in January. Now, management says that with the deceleration in plane orders — Boeing’s sold only 17 so far this year — it’s going to ramp down 777 production even more, to just five planes per month starting in August.
So where does this leave Boeing with regard to its legendarily long backlog of planes awaiting construction? Based on the most current data, the production schedule looks roughly like so:
*Dear Boeing: Please define “late.”
Where we are now
Since we last checked
Article source: http://www.fool.com/investing/2016/12/29/boeing-stock-could-suffer-from-777-production-cut.aspx
