B767 pilots reported an altitude deviation due to a malfunctioning autopilot.

Attributes
ACN	1566724
Time
Date	201808
Local Time Of Day	0001-0600
Place
Locale Reference	ZZZZ.ARTCC
State Reference	FO
Environment
Flight Conditions	VMC
Aircraft 1
Make Model Name	B767 Undifferentiated or Other Model
Operating Under FAR Part	Part 121
Flight Phase	Cruise
Flight Plan	IFR
Component
Aircraft Component	Altitude Hold/Capture
Person 1
Function	First Officer Pilot Flying
Qualification	Flight Crew Air Transport Pilot (ATP)
Experience	Flight Crew Type 833
Person 2
Function	Pilot Not Flying Captain
Qualification	Flight Crew Air Transport Pilot (ATP)
Experience	Flight Crew Last 90 Days 240 Flight Crew Total 16000 Flight Crew Type 1696
Events
Anomaly	Aircraft Equipment Problem Less Severe Deviation - Altitude Excursion From Assigned Altitude Deviation - Procedural Clearance

Narrative:

Aircraft was deferred with thrust management inoperative. Approximately 40 miles east of zzzzz; [we] were given climb to FL340 from FL320. Used flch [and] added power manually to QRH climb power for altitude/tat - observed altitude hold annunciation; altitude hold light on MCP and aircraft leveled off normally. As I was fine-tuning the N1 to achieve the correct mach number; I saw the altitude warning light illuminate on the baro altimeter with aircraft descending thru FL33.8 with flight director above; autopilot light was engaged and I think the altitude hold light was too but not 100% sure. With assessing situation and reaction time; the plane had descended to 33;700 when I disconnected the autopilot and hand flew to FL340. Lowest altitude deviation was approximately 350. Airspeed was .805 (I know because I was fine-tuning it to try to get to target of .81). I went on break shortly after and captain had call with maintenance and they suspected MCP issues based on ap checks maintenance asked the captain and relief officer to do. (Aircraft was wandering in altitude with vsi swings of +/- 300-700 with different ap selected). ZZZZ did ask about our altitude deviation and we said we were having flight management issues.

Original NASA ASRS Text

Title: B767 pilots reported an altitude deviation due to a malfunctioning autopilot.

Narrative: Aircraft was deferred with Thrust Management inoperative. Approximately 40 miles east of ZZZZZ; [we] were given climb to FL340 from FL320. Used FLCH [and] added power manually to QRH climb power for altitude/TAT - observed ALT HOLD annunciation; ALT HOLD light on MCP and aircraft leveled off normally. As I was fine-tuning the N1 to achieve the correct Mach number; I saw the altitude warning light illuminate on the baro altimeter with aircraft descending thru FL33.8 with flight director above; autopilot light was engaged and I think the ALT HOLD light was too but not 100% sure. With assessing situation and reaction time; the plane had descended to 33;700 when I disconnected the autopilot and hand flew to FL340. Lowest altitude deviation was approximately 350. Airspeed was .805 (I know because I was fine-tuning it to try to get to target of .81). I went on break shortly after and Captain had call with Maintenance and they suspected MCP issues based on AP checks Maintenance asked the Captain and Relief Officer to do. (Aircraft was wandering in altitude with VSI swings of +/- 300-700 with different AP selected). ZZZZ did ask about our altitude deviation and we said we were having flight management issues.

Data retrieved from NASA's ASRS site and automatically converted to unabbreviated mixed upper/lowercase text. This report is for informational purposes with no guarantee of accuracy. See NASA's ASRS site for official report.