Aerospace giant Boeing announced last week that it plans to slash production of the iconic four-engine 747 jumbo jet to only six a year starting from September.
According to the official news release, the decision came as a result of a strong decline in demand for the aircraft.
“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 vice chairman and president and CEO of Boeing Commercial Airplanes.
“While we remain confident in the 747-8’s unique value-proposition and an upcoming replacement cycle for late-model 747-400 Freighters, we’re taking the prudent step to further align production with current market requirements.”
Boeing also warned investors that the decision is likely to result in a $569 million after-tax charge on its next earnings report.
“We are closely monitoring the air cargo market as we work to win additional orders to support ongoing future production. At the same time, we continue to aggressively drive productivity to lower costs across our production system to offset the current market challenges,” said Greg Smith, executive vice president of Business Development & Strategy and Chief Financial Officer.
The 747, also known as the “Queen of the Skies” has fallen out of favour due to the development of smaller, two-engine aircraft that save on fuel costs.