Dive Brief:

• Boeing is cutting the production of 787 aircraft to 12 per month, down from 14, as the company experiences weaker demand as a result of the ongoing trade war between the U.S. and China, Boeing CEO Dennis Muilenburg said Wednesday on the company's third-quarter earnings call.
• This lower production level will begin in 2020 and continue for about two years as low order numbers from China have "put pressure on the production rate," Muilenburg said.
• "We're going to continue to monitor the U.S.-China trade policy discussions and then we'll continue to make our plans going forward," he said. "We have a very disciplined process for looking at the market, our supply chain health, all of the other parameters that might affect our customers' decision making process."

Dive Insight:

A commercial market forecast Boeing released earlier this year estimates China will need about 8,100 new aircraft over the next 20 years, saying the country "is projected to become the world's largest aviation market in the near future."

"But in the near-term, our skyline has been dependent on orders from China," Muilenburg said on the call. "And now that we're within lead time on our production system and those orders from China have not materialized, we need to make a decision. And so that's what you see reflected here."

Muilenburg said it would continue to monitor the trade situation between China and the U.S.

President Donald Trump pointed to Boeing earlier this month as one company that could benefit from the "phase one" trade deal negotiated between the two countries. "Other aspects of the deal are also great - technology, financial services, 16-20 Billion in Boeing Planes etc." Trump tweeted without providing details on how the company would benefit.

The trade war adds to Boeing's ongoing struggle as it deals with the grounding of its 737 MAX earlier this year following two crashes involving the aircraft. This grounding also resulted in a production cutback, moving from 52 aircraft per month to 42.