Boeing to cut 747-8 production, take $569M charge

Boeing to cut 747 production in half

Boeing announced Thursday it will take a $569 million after-tax charge in its fourth-quarter results as it scales back production of its 747-8.

The airplane manufacturer in September plans to cut 747-8 production to one airplane every two months from one every month previously. Sluggishness in the air cargo market drove the decision, Boeing said.

"Global air passenger traffic growth and airplane demand remain strong, but the air cargo market recovery that began in late 2013 has stalled in recent months and slowed demand for the 747-8 Freighter," said Ray Conner, Boeing's vice chairman, in a statement.

747-8 Boeing Freighter Plane
Source: Boeing

The company plans to report full quarterly results Jan. 27 before the opening bell. Before the charge analysts expected Boeing to report earnings of $2.13 a share on $23.59 billion in revenue for the quarter, according to a consensus estimate from Thomson Reuters.

The after-tax charge comes to 84 cents per share. It will not affect Boeing's 2015 revenue or cash flow.

Why Americans are less satisfied with flying
China's first self-developed large passenger jetliner C919 is presented after it rolled off the production line on November 2, 2015 in Shanghai.
Is China a real threat to Boeing and Airbus?
A 787 airplane during the manufacturing process at the Boeing facility in Everett, Washington.
Boeing sees Middle East orders topping 3,000 planes

The company stressed that it did not see weakness in air passenger travel. However, it cited a 1.2 percent year-over-year contraction in air freight traffic in November.

"We are closely monitoring the air cargo market as we work to win additional orders to support ongoing future production," said Greg Smith, Boeing's chief financial officer.

The company's shares fell more than 1 percent in after-hours trading Thursday.