Boeing announced Monday that it doesn’t have enough orders to maintain the current 777 widebody jet program production rate of 7 airplanes per month and will cut production in Everett to 5 airplanes per month beginning in August.
That’s the worst case scenario outlined by Boeing chairman and chief executive Dennis Muilenburg in October.
And it means that the following year, 777 production will drop to just 3.5 jets per month, as Boeing introduces blank positions in the assembly line before and after each of the first six 777X models it builds to allow extra time for assembly of that new airplane.
This year, Boeing was making 777s at a rate of 8.3 per month or 100 per year. In January, the company announced a cut to 7 jets per month, which has been implemented this month.
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The cut to 5 jets per month and then to 3.5 jets per month means that in 2018 production will be more than halved from 100 jets per year to 42 jets per year.
In a message to employees Monday, Elizabeth Lund, vice president responsible for the 777 program, said Boeing expects some effect on employment in Everett next year.
“While the exact number of affected positions has not yet been determined, we will do our best to lessen the impact,” she wrote.
Lund said the decision came after lengthy discussions about current market demand
“Despite tireless work by the sales team, orders have slowed,” she said. “The market is signaling near-term hesitation in some regions.”
The move comes despite an agreement over the weekend with Iran, which wants to buy 15 current model 777s.
That’s not enough to fill even the roughly 39 empty slots in the production schedule over the next two years. Beyond that, Boeing has more than 80 empty production slots in 2019 and 2020.
Lund said that while the Iran deal is good news, Boeing has “already factored this agreement into our assessment.”