Boeing 737 MAX assembly, Renton, Wash.

Boeing Deliveries Suffer Under FAA Scrutiny

Feb. 14, 2024
The aircraft manufacturer’s best-selling series is under an extensive safety and compliance review, but an executive reported that the OEM will raise its assembly rate later this year.

Boeing Commercial Airplanes delivered 27 aircraft during January, -29% fewer than during January 2023, demonstrating the scope of the problem for the OEM since the exposure of a manufacturing defect in its 737 MAX series. Following a structural failure on a 737 MAX jet early last month, Boeing paused the manufacturing and assembly process for its top-selling aircraft series.

The January deliveries included 25 737 MAX jets, down from 35 delivered last January.

In the January 5 event, an Alaska Airlines 737 MAX flight from Portland, Ore., to Ontario, Calif., experienced an in-flight emergency shortly after takeoff when a side panel in the cabin was blown open, depressurizing the aircraft. The jet returned to Portland and landed safely with all 171 passengers and six crew members.

As Boeing worked to reevaluate its assembly processes, the Federal Aviation Administration placed inspectors on location at the Renton, Wash., plant where the 737 MAX program is centered. Now, FAA is blocking any increase in 737 MAX production rates.

But CFO Brian West reportedly told an audience of investors on February 13 that Boeing will increase that output from 31 to 38 jets/month in the second half of this year.

While Boeing posted solid new orders and deliveries for 2023, and continues to have a strong backlog of orders for the 737 MAX, stabilizing production and increasing output is a critical issue for the manufacturer. It also has a large volume of 737 MAX jets in storage, completed during the 2019-20 period, when the program was grounded but manufacturing continued.

New orders are an important indicator of growth, but aircraft deliveries are even more important to financial performance. In 2023 Boeing struggled to increase deliveries against a variety of obstacles, including manufacturing and performance defects and other complications with a major supplier.

Achieving 38 jets/month in output would be a mark of progress, closer to the 50 jets/month that was Boeing’s target when it first announced plans increase production in July 2023. It remains set at 31 jets/month, with FAA stating explicitly that no increase in production will take place until the program’s reliability can be ascertained.

Throughout the review and oversight process since January 5, Boeing has maintained that it is cooperating with FAA and committed to regaining the confidence of its customers. This underscores the particular concern about the January deliveries: Boeing is not only decreasing its output under FAA’s purview, but is unable to cash-in the orders it has in place, and facing the possibility that some orders may be cancelled as customers lose confidence in the 737 MAX.

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