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Exclusive: Boeing signals two-month delay to 737 production ramp-up, sources say

Boeing's 737 MAX-9 is pictured under construction at their production facility in Renton, Washington, U.S., February 13, 2017. REUTERS/Jason Redmond/File Photo
Boeing's 737 MAX-9 is pictured under construction at their production facility in Renton, Washi... Boeing's 737 MAX-9 is pictured under construction at their production facility in Renton, Washington, U.S., February 13, 2017. REUTERS/Jason Redmond/File Photo
Boeing's 737 MAX-9 is pictured under construction at their production facility in Renton, Washington, U.S., February 13, 2017. REUTERS/Jason Redmond/File Photo
Boeing's 737 MAX-9 is pictured under construction at their production facility in Renton, Washi... Boeing's 737 MAX-9 is pictured under construction at their production facility in Renton, Washington, U.S., February 13, 2017. REUTERS/Jason Redmond/File Photo

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Two individuals familiar with the situation have stated that Boeing (BA.N.) has communicated to its suppliers that the company’s plans to increase production of its 737 narrowbody aircraft, the company’s most popular product, would go around two months more slowly than was initially planned.

According to a new master schedule that Boeing revealed to its suppliers during the past week, the American aircraft manufacturer anticipates that it will initially produce 42 of its 737s per month beginning in February 2024. The sources provided this information.

To satisfy the ever-increasing demand from customers, both Boeing and its European competitor Airbus (AIR.PA) have devised ambitious plans to enhance production, notably for the construction of single-aisle planes that are particularly popular. But both manufacturers of airplanes have had to contend with bottlenecks in their supply chains and disruptions in their production.

After a supplier mistake hindered ramp-up plans this autumn, analysts had previously expected that Boeing would adjust its on-paper timeline, which targeted the end of 2023 to achieve 42 planes manufactured per month. The on-paper program targeted the year 2023.

As a result of the revised timetable, further rate increases are also pushed forward. For example, Boeing’s aim to boost production of 47.2 aircraft per month was shifted from June to August 2024, and the company’s goal to expand production of 737s to 52.5 jets per month was moved from December 2024 to February 2025.

According to Boeing’s projections, the company will reach its pre-pandemic objective of 57.7 monthly aircraft in October 2025. This represents a three-month delay from the initial July 2025 target.

Regarding the revised master timetable, which Boeing does not reveal, the company declined to comment particularly on the matter. A spokeswoman for the corporation stated, “We still plan to increase to 50 airplanes per month in the timeframe of 2025-2026,” reiterating one of the company’s publicly recognized ambitions.

After a drop of 1.5% following the announcement of the updated timetable by Reuters, Boeing shares completed the day on Thursday with a flat closing price.

An increase to 42 planes per month in February would be “good news,” according to a note that Deutsche Bank sent out to investors on Thursday. The majority of investors had projected that the increase would occur in the second or third quarter of 2024, according to the report.

An essential drumbeat and a measure of confidence are provided to one of the most crucial worldwide supply chains in the industry by the master timetable for the 737. This schedule outlines the expectation for when suppliers should be at a specific production rate.

However, it is possible that the timetable does not precisely match the precise moment at which a planemaker can reach a stable production rate. Furthermore, it is not very unusual for the schedule to vary due to various variables.

Stan Deal, the head of Boeing’s commercial aircraft business, stated in an interview with Bloomberg TV in June that the corporation was contemplating increasing the number of jets it produced per month to 42 by the end of 2023. This rate adjustment was subsequently reflected in the supplier master schedule that Reuters revealed in October.

In July, the business announced that it would raise the number of 737 planes it produced monthly from 31 to 38.

On the other hand, Boeing was compelled to undergo time-consuming inspections of some of the 737 MAXs on its manufacturing line and in its inventory because of a supplier issue identified in August. This caused the ramp-up to be slowed down.

Boeing’s Chief Executive Officer, Dave Calhoun, stated in October that the corporation intended to achieve a monthly production rate of 38 aircraft by the end of the year.

At that time, he made the statement, “We are keeping our suppliers hot according to the master schedule.”

Calhoun has said that Boeing can produce sixty 737s every month and that there is sufficient demand to enhance production to such levels. However, the business must guarantee that the projected rate increases can be implemented through the supply chain.

A total of 52 Boeing 737s were being manufactured per month before the grounding of the 737 MAX in 2019.


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