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Boeing to cut 747-8 production in half, take Q4 charge
[LONDON] Boeing Co said on Thursday it will cut production of its 747-8 jumbo jet in half and take a US$569 million charge in the fourth quarter to account for the change.
The move will help Boeing keep the 747-8 production line running in the face of dwindling sales. The four-engine jet is now mostly a cargo workhorse, eclipsed by more fuel-efficient twin-engine jets. But it also will be used to upgrade the US Air Force One presidential fleet. "The air cargo market recovery that began in late 2013 has stalled in recent months and slowed demand for the 747-8 freighter," Ray Conner, chief executive of Boeing Commercial Airplanes, said in a statement.
Boeing said it will cut output to half a plane a month in September, down from a target of one a month that it will reach in March. Boeing had already announced plans to cut production to one a month from 1.3 a month currently.
The after-tax charge of US$569 million, or 84 cents a share, will be taken in the fourth quarter of 2015, Boeing said. Before tax, the charge amounts to US$885 million. Boeing said the charge will not affect 2015 revenue or cash flow.