Boeing Delays Key Production Milestone for 737 Jets

According to two industry sources, Boeing has informed suppliers of a three-month delay in reaching a key production milestone for its 737 jet family.

This delay pushes the target to reach an output of 42 jets per month from June to September. Boeing’s struggle with regulatory scrutiny and supply chain issues continues to impact its production schedule.

Impact of Regulatory and Supply Issues:

Boeing’s production slowdown follows increased scrutiny from regulators, airlines, and lawmakers. The heightened scrutiny stems from a January incident in which a door plug blew off an Alaska Airlines jetliner mid-flight.

Consequently, Boeing’s production has been lagging, as reflected in its supplier master schedule, which outlines expectations for supplier production rates but does not necessarily mirror actual production.

The decision to delay the production target indicates that Boeing anticipates ongoing supply pressures. Rival Airbus, the world’s largest planemaker, faces similar challenges. It is also experiencing disruptions due to parts and labor shortages.

Revised Production Schedule:

According to the new supplier schedule, Boeing aims to reach an output of 47 jets per month by March 2025, a delay from the previously targeted January 2025.

Furthermore, the output target of 52 monthly jets has been pushed from June 2025 to September 2025.

Financial Impact and Market Reaction:

The delay in production targets and ongoing challenges have had financial repercussions for Boeing. Shares of Boeing fell by 2.2% in Friday trading following the news.

Last month, Boeing announced that it would burn cash rather than generate it in 2024, and it does not expect deliveries to increase in the second quarter as originally anticipated.