Boeing's 737 Production Ramp-Up Is A Delayed Takeoff

Boeing has informed its suppliers that it will delay its plans to increase production of its popular 737 narrowbody jetliner by about two months from its original schedule, according to two individuals familiar with the matter. Sources revealed that the U.S. aircraft manufacturer is now targeting to produce 42 of its 737s per month by February 2024, which is based on a new master schedule that Boeing has shared with its suppliers over the past week. 


Both Boeing and its European competitor, Airbus, have announced ambitious plans to boost production, specifically for their in-demand single-aisle models, to meet the increasing demand of their customers. However, both companies have had to face challenges in their supply chains and production processes. Experts had already anticipated that Boeing would adjust its production schedule after a supplier error impeded its ramp-up plans this fall, with the company aiming to produce 42 jets per month by the end of 2023. The latest schedule revision also postpones subsequent rate increases, moving Boeing's target of producing 47.2 jets monthly from June to August 2024, while the goal of increasing 737 production to 52.5 jets a month has been delayed from December 2024 to February 2025. 

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Boeing now expects to reach its pre-pandemic target of 57.7 aircraft per month by October 2025, which is a three-month delay from the original plan of July 2025. While Boeing declined to comment on the new master schedule, which it does not disclose, a spokesperson stated that the company still plans to increase its monthly production to 50 airplanes in the 2025/2026 timeframe, which is one of the company's publicly acknowledged objectives. Following Reuters' release of the new schedule, Boeing's shares fell 1.5% on Thursday before recovering to close flat. Deutsche Bank noted in a Thursday report to investors that the February timeline for 42 jets per month would be "good news," as most investors had expected the increase to occur in the second or third quarter of 2024. The 737 master schedule, which outlines the expected production rate for suppliers, provides an important drumbeat and gauge of confidence for one of the industry's most critical global supply chains. 


However, the schedule may not correspond exactly with the exact point in time a planemaker can achieve a steady production rate, and it is not unusual for it to change due to various factors. In June, Stan Deal, head of Boeing's commercial airplanes division, told Bloomberg TV that the company was considering ramping up to 42 jets per month by the end of 2023, a rate change that was later reflected in the supplier master schedule reported by Reuters in October. In July, the company announced that it was raising 737 production from 31 to 38 jets per month. However, a supplier error discovered in August forced Boeing to carry out time-consuming inspections of some of the aircraft on its production line and inventory, slowing the ramp-up. In October, Boeing CEO Dave Calhoun said that the company planned to achieve production of 38 planes per month by year-end. "We are keeping our suppliers hot according to the master schedule," he said at the time. Calhoun has stated that Boeing can manufacture 60 737s a month, and there is enough demand to increase production to those levels. However, the company needs to ensure that its planned rate increases can make it through the supply chain. Before the grounding of the 737 Max in 2019, Boeing was producing 52 737s a month.

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