Boeing to boost output of 737 jets in push for more cash

BOEING plans to crank up the output of its 737 family of jets to a 38-plane monthly rate by the middle of the year, months earlier than analysts had predicted, according to people familiar with the matter.

The US planemaker has been briefing customers on its plans to step up production of its main cash cow aircraft over the next few months while hiring and training workers to support the faster manufacturing pace, said the people, who asked not to be identified discussing a confidential matter.

Speeding up manufacturing and deliveries of its 737 Max could allow Boeing to reach its target of US$10 billion in yearly free cash flow by 2025 or 2026, without giving up market share to rival Airbus. After an address to New York’s Wings Club on March 30, Boeing’s commercial chief Stan Deal told reporters rate increases were in the works and should happen “very soon”.

Shares reversed a decline on Thursday (Apr 6) on news of the production hike, rising 0.5 per cent to US$211.07 as of 2.51 pm in New York and paring an earlier gain of 1.1 per cent. The stock gained 10 per cent this year through the close of Wednesday’s trading session.

Boeing has worked over the past year to create a stable flow of jets from a factory in Renton, Washington, at a 31-jet monthly pace. Doing so hasn’t been easy. The manufacturer has grappled with shortages of engines, cabin equipment and worked to bring new hires up to speed after years of disruption caused by the Covid pandemic and a global grounding of the 737 Max.

The Arlington, Virginia-based planemaker is expected to report a surge in first-quarter deliveries next week when it discloses March handovers, a sign of the progress Boeing is making towards stabilising work in its factories. Boeing handed over an estimated 53 Max planes last month and a total of 130 jetliners in the first quarter, according to a forecast from Jefferies analyst Sheila Kahyaoglu.

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The production increase is contingent on the company’s suppliers continuing to make progress towards smoothing glitches in their own factories, and the timing could slip, one of the people said.

Executives at Spirit AeroSystems Holdings, which manufactures the aluminium frame for the narrow-body jets, said in February they plan to hike output for 737 parts to a 38-jet monthly pace by August, and a 42-jet pace by October, under a schedule hammered out with Boeing.

Other suppliers follow different schedules, based on the inventory they’ve already provided to Boeing, said Cliff Collier, a principal at Charles Edwards Management Consulting. Progress also could be halting due to the existing strain on aerospace manufacturers. BLOOMBERG