Boeing plans 737 MAX ramp-up, backs cash-flow goal

Company tries to recover from a series of crises following fatal crashes

By Reuters

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A Boeing 737 MAX-9 under construction at the production facility in Renton, Washington. - Reuters file
A Boeing 737 MAX-9 under construction at the production facility in Renton, Washington. - Reuters file

Published: Wed 26 Apr 2023, 4:43 PM

Boeing Co said on Wednesday that it planned to ramp up production of its 737 MAX jets to 38 per month by year-end, while backing its annual cash-flow goal, as it tries to reassure investors after manufacturing problems threatened to derail deliveries.

Boeing’s jet deliveries and free cash flow are being closely watched as the company tries to recover from a series of crises since two fatal MAX crashes in 2018 and 2019.

Reuters reported earlier this month that Boeing’s schedule called for suppliers to ramp up to 38 737 MAXs a month in June. That is seven jets more than its current production rate.

Production of the widebody 787 Dreamliner has stabilised at three, the planemaker said, adding that it would increase to five per month by year-end.

Overall, Boeing reaffirmed plans to generate $3 billion to $5 billion in free cash flow this year, as well as deliver 400 to 450 737 MAXs and 70 to 80 787 Dreamliners. Boeing shares were up 4 per cent in trading before the bell.

In the first quarter, Boeing’s cash burn slowed to $786 million from $3.57 billion a year earlier, as it delivered about 27 per cent more jets. Planemakers usually receive a major portion of cash when they hand over aircraft.

Margins at its defense unit were negative as it recorded a $245 million pre-tax charge on the KC-46 tanker program, putting total pre-tax losses on the program at about $7 billion.

Boeing reported an adjusted loss per share of $1.27, wider than analyst expectations of a loss of $1.07 per share, as per Refinitiv data. Revenue of $17.92 billion beat analyst expectations of $17.57 billion.

The company paid down $1.6 billion in debt, which now stands at $55.4 billion.

Rework on the MAX “will impact the timing of deliveries over the next several months; however, we remain confident in the operational and financial goals we set for this year,” Boeing CEO Dave Calhoun wrote in a letter to employees.

Calhoun added in a statement that the company was “progressing through recent supply chain disruptions.”

The latest MAX manufacturing problem - which involves two brackets that were incorrectly installed on the fuselage made by Spirit AeroSystems - raised questions about Boeing’s ability to meet its annual targets.

Boeing had said the issue, which dates back to 2019, impacted a “significant” number of undelivered MAX planes in production and in storage, as well as those in service. Boeing executives are expected to detail the scope of the problem on an investor call later in the day.

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