Boeing, the American aircraft manufacturing giant, is ramping up production of its popular 737 narrow-body jet, expecting increased deliveries in the near future. The company reported better-than-expected second-quarter results, leading to a 7 percent surge in its shares, reaching a 1-1/2-year high.
CEO Dave Calhoun stated that Boeing is transitioning its 737 production line to build 38 jet aircraft per month, up from the previous rate of 31. This significant increase marks an important move for the company, with further rate breaks planned in the future. In fact, Boeing is already in prep mode to raise its monthly production to 42 jets.
However, stabilizing production lines will be a challenge for Boeing as it aims to increase its 737 production to a target of 50 to 60 jets per month by 2024. The company has informed its suppliers that it plans to increase production to 47 jets per month in June 2024. Despite these ambitious goals, Boeing’s CEO cautioned that supply chain constraints may persist, with competition for essential parts becoming increasingly intense.
Boeing’s commercial planes division reported higher revenues due to increased deliveries of its 787 Dreamliner. However, Chief Financial Officer Brian West noted that commercial margins would likely show improvement but remain negative in the third quarter.
To meet demand and clear its inventory, Boeing aims to deliver most of the 228 MAXs by the end of 2024. Notably, a significant portion of the inventory jets, 85 out of 228, are intended for Chinese customers. Additionally, Boeing plans to generate $3 to $5 billion in free cash flow in 2023, while also delivering at least 400 single-aisle 737s and 70 787 Dreamliners.
It is crucial for Boeing to increase production and meet delivery targets to maintain its competitive position in the aviation industry. However, the company will need to address supply chain challenges and ensure the stability of its production lines to achieve these goals.
