Boeing plans to continue producing fewer than 38 737 MAX aircraft monthly in the first half of 2024, with hopes of ramping up production to 38 per month in the second half. This strategy is part of Boeing's ongoing efforts to stabilize its production processes, especially following recent scrutiny over a mid-air incident involving an Alaska Airlines flight.
By Avinash VJ
Production Goals and Stability Efforts
Brian West, Boeing's CFO and Executive Vice President of Finance, spoke at the Wolfe Research Global Transportation & Industrials Conference on May 23, 2024, outlining significant changes in the 737 MAX production system. The primary focus, according to West, is on achieving production stability, reducing traveled work, and improving overall quality. Boeing aims to maintain a production rate below 38 units per month during H1 2024, with plans to reach 38 units per month in the latter half of the year.
Positive Trends at Spirit AeroSystems
West highlighted positive developments at Spirit AeroSystems, Boeing's Tier 1 supplier responsible for producing the 737 fuselage. Boeing's close collaboration with Spirit AeroSystems, based in Wichita, Kansas, has been crucial in meeting early production expectations. West expects this positive trajectory to continue, with significant progress anticipated beyond June 2024. He noted that Q2 deliveries should align with Q1's, during which Boeing delivered 67 737 MAX aircraft. In April alone, Boeing delivered 16 units, nearly matching the 17 delivered in April 2023.
Reintegration of Spirit AeroSystems
West discussed Boeing's plans to reintegrate Spirit AeroSystems, emphasizing the benefits of having a unified operating team and streamlined systems. This reintegration aims to enhance factory efficiency, safety, and quality. The acquisition process, though complex, is expected to advance in Q2 2024. West noted that the integration would allow Spirit AeroSystems to continue fulfilling obligations to other customers while gradually aligning more closely with Boeing's operations.
Impact of Regulatory Review in China
Boeing is also dealing with regulatory challenges in China, where the Civil Aviation Administration of China (CAAC) is reviewing the cockpit voice recorder batteries on the 737 MAX, 787, and 777X models. This review has resulted in delayed deliveries to Chinese airlines, impacting Boeing's overall delivery schedule and cash flow. As of April 30, Boeing had delivered 22 aircraft to China, including two 737 MAXs to Minsheng Financial Leasing. The most recent delivery to a Chinese customer was a Boeing 787-9 to China Southern Airlines on May 12, 2024, although the aircraft first flew on May 15, 2020.
West indicated that the CAAC's additional validation requirements for lithium batteries have stalled deliveries, further affecting Boeing's operations in the region.
In summary, Boeing is focused on stabilizing its 737 MAX production while navigating the complexities of reintegrating Spirit AeroSystems and addressing regulatory challenges in China. These efforts are aimed at enhancing production efficiency, safety, and quality, with a goal of increasing output in the latter half of 2024.
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