Boeing is adjusting its 737 production strategy, focusing more on quality and comprehensive checks rather than strictly adhering to its previously stated production rate. This nuanced approach sheds light on the aerospace manufacturer’s commitment to safety and precision, even if it means producing fewer aircraft per month than initially planned.
Brian West, Boeing’s Chief Financial Officer, provided clarity during a February 13 investor conference, explaining that while suppliers are geared up for a 38 aircraft per month rate, the actual number of 737s being completed is lower. This strategy allows Boeing to spend more time on each aircraft, ensuring that every detail meets the company’s high standards. West’s revelation at the conference, hosted by TD Cowen, contrasts with the January statement from Boeing’s CEO, David Calhoun, who had indicated a steady production rate of 38 737s per month.
The first half of 2024 is expected to see a continuation of this cautious approach, with production rates anticipated to increase in the latter half of the year. This plan highlights Boeing’s focus on incorporating lessons learned into the manufacturing process, ultimately aiming to enhance the overall quality and reliability of its aircraft.
Clarifying Confusion and Ensuring Quality
The discrepancy between the production rates cited by Calhoun and the actual output has sparked discussions among suppliers and industry analysts. Some suppliers expressed confusion, noting the numbers didn’t match their observations. Michael Merluzeau, an aerospace analyst with consultancy AIR, pointed out that there seems to be some misunderstanding regarding Boeing’s production capabilities. AIR’s analysis suggests that the actual production rate is between 20-25 737 jets monthly, a figure derived from observing the output from Boeing’s Renton factory.
Further analysis of Boeing’s own quarterly figures indicates a reduction in the inventory of undelivered 737s, with fourth-quarter deliveries suggesting an actual production closer to 20 aircraft per month. This assessment aligns with observations from industry insiders and provides a clearer picture of Boeing’s current production pace.
Regulatory Oversight and Future Adjustments
The Federal Aviation Administration (FAA) has played a pivotal role in overseeing Boeing’s production rates. Following an incident involving an Alaska Airlines Boeing 737 Max 9, the FAA set a cap on Boeing’s production at 38 aircraft monthly. This regulatory action underscores the importance of safety and quality in aviation manufacturing.
Boeing is currently undergoing a comprehensive audit by the FAA, examining both its operations and those of its 737 fuselage supplier, Spirit AeroSystems. This six-week audit aims to identify areas for improvement and ensure that Boeing’s production processes meet the highest safety standards. During this period, Boeing has been proactive in pausing its production line as needed to accommodate the audit’s requirements, demonstrating the company’s commitment to transparency and continuous improvement.
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