Some of Britain’s biggest engineering companies lost hundreds of millions in market value this morning after Boeing announced it will cut production of its 737 Max range by nearly 20 per cent.
Suppliers to the US firm including Rolls-Royce lost out as investors digested the news announced on Friday afternoon, which is the latest blow to the embattled plane maker after the second fatal crash of its newest jet model in five months killed all 159 people on board.
Rolls-Royce, which builds engines for Boeing jets, saw around £213m wiped off its value as shares fell 1.25 per cent, while Melrose, which owns engineering firm GKN, lost about £124m amid a 1.35 per cent share slide.
Meggitt, which makes brakes and other high-performance materials for both passenger and military jets, also lost £39m from its market cap.
Boeing said on Friday production of its best-selling plane will be cut to 42 airplanes per month from 52 starting in mid-April.
The scale-down was not given an end date, as 737 Max planes remain grounded across the globe after an Ethiopian Airlines plane crashed in March.
It has replaced the company’s previous plan of scaling up production to 57 a moth by this summer.
Investigators have found the crash was related to a malfunction with the aircraft’s anti-stall system known as MCAS which sent a Lion Air jet, also a 737 Max, down in October, killing 187 people.
The incidents have drawn attention to the rapid push to market of the updated version of the jet, amid worries Boeing’s testing and training process has not been rigorous enough.
Boeing’s arch rival, Airbus, has again enjoyed a boost from the US firm’s troubles, with shares rising 1.95 per cent today.
David Madden, analyst at CMC Markets, said: "The scaling back by Boeing will be felt by the entire aerospace sector as the many companies manufacture various different components that get used in the Boeing 737 Max aircrafts.
"Boeing are one of the biggest players in the sector so when they sneeze, supplier firms like Meggitt, GKN and Rolls Royce catch a cold."
Rolls-Royce has also been under pressure after Singapore Airlines said it would ground two Boeing 787-10 models because of problems with the engine maker's Trent 1000 engine.
The Trent 1000's mechanical worries have posed a persistent issue for Rolls in the last year, after grounding one of British Airways’ new Boeing 787 Dreamliner jets at Heathrow airport for nearly a year.
Virgin Atlantic, Air New Zealand, Thai Airways and Latam planes have also been kept out of the sky because of the issue withthe engine, which ultimately cost the manufacturer £790m last year.