On Tuesday, Brian West, the CFO of Boeing, announced that the company plans to maintain a steady production rate of 38 737 aircraft per month in the latter half of 2024. This decision comes after the production line was slowed due to a mid-air cabin explosion on a 737 MAX 9 last month. West, speaking at the Cowen Aerospace & Defense Conference, explained that the reduced aircraft delivery volumes, compensations paid to airlines due to the grounding of the MAX 9, and the need to hold extra inventory from its supply chain will all lead to increased cash expenditure in the first quarter.
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Although Boeing had previously stated it was maintaining a rate of 38 737s per month, West clarified that the company has had to intermittently halt the line to prioritize quality following the incident. West acknowledged the need to keep the airplanes in position for longer periods to incorporate the lessons learned from the incident. He added that any future rate increases would be subject to approval by the Federal Aviation Administration (FAA). Following the announcement, Boeing's shares fell by 2.3% in morning trading.
In response to the accident on January 5, where a door plug detached from a brand new MAX 9, the FAA initiated an audit of Boeing's 737 production line and has since forbidden Boeing from increasing its MAX production rate without its permission.
West also mentioned that Boeing's suppliers are scheduled to ramp up the production of 737 components this month to meet the requirements for building 42 planes a month. He reassured that Boeing has the necessary funds to manage the increase in inventory and maintain a stable supply chain. If the suppliers continue to increase production as planned, West believes they will be in a better position to avoid some of the issues that have historically plagued them.