British Boeing supplier Senior warns 737 Max groundings will hit profits

Engineering firm Senior this morning warned margins in its aerospace division will take a hit from Boeing’s production cuts in the wake of its 737 Max planes being grounded across the globe.

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Senior makes components used in commercial and military jets, and Boeing is one of its biggest customers. A sharp uptake in work on the 737 Max boosted the manufacturer’s profits last year.

The firm said part of its aerospace business based in Seattle, also a major base for Boeing, will be hit after the US plane maker cut production rates on the jet from 52 to 42 a month, following last month’s second of two deadly crashes involving the jet which killed a total of 346 people.

“This is one business in particular that is unlikely to be able to fully mitigate this impact of a cut to rate 42 instead of gearing up for an increase to rate 57,” Senior said in a statement.

The aerospace division accounts for 71 per cent of FTSE 250-listed Senior’s revenue, and it supplies parts directly to Boeing.

Senior now thinks margins in the segment will be 10 per cent, down on its previous guidance of 10.6 per cent.

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Yesterday Boeing said it had suspended its 2019 forecasts as it scrambles to get the 737 Max model back in the air, adding the fallout from its grounding had so far cost it more than $1bn (£780m).