Boeing will cut production of 747, take $569 million charge

The company previously announced plans to slow production from 1.3 planes a month to just one a month, with the new and lower capability expected to kick in from March 2016.

To account for the market and production impacts, the company will recognize a $569 million after-tax charge ($0.84 per share) when it announces financial results for the fourth quarter of 2015.

Nicknamed the “queen of the skies”, the 747 has been in continuous production since the late-1960s in various models.

He voiced confidence that business would pick up for the 747-8 jet as companies replace their older 747-400 freight airplanes, but said cutting back production was a “prudent step to further align production with current market requirements”.

The four-engined plane is being overtaken in popularity by twin-engined craft which are more fuel efficient.

That’s less than half the actual list price of a new 747-8 passenger jet that lists for $378.5 million or the freighter version at $379.1 million.

Global air-freight yields, measuring dollars generated for a given carried weight, are now at levels below those in 2009 during the global economic downturn, according to the International Air Transport Association. Global passenger demand, in comparison, increased 5.9% the company said. These are structural issues specific to the 747 & do not tell us much, if anything, about the health of BA’s other platforms.

The era of the jumbo jet could be drawing to close with Boeing cutting its production of the giant aircraft by half. The airline had four on order. As a result, the jetmaker will book an $885 million pre-tax write-off when it announces financial results on Wednesday. “The earnings charge will not affect the company’s 2015 revenue or cash flow”, Boeing said.