Boeing CEO has ambitions to lift 737 Max output to new record

Boeing Co. dangled the prospect of pushing production of its 737 jetliner far beyond current levels, underscoring the planemaker’s newfound confidence as it wins huge orders and puts its aircraft division on steadier financial footing after years of crisis.

The US planemaker would consider lifting output of the workhorse narrowbody to a 60-jet monthly pace, depending on how it progresses through a series of coming production-rate breaks, Chief Executive Officer Dave Calhoun said on an earnings call on Wednesday after Boeing reported numbers that beat estimates. 

The second half of 2024 will be a “very important moment time, because I believe that’s the step-change for BCA and pretty much in every way,” Calhoun said, referring to Boeing’s commercial aircraft subsidiary. “And if we get through that well and we execute well, then we’ll be talking to all of you about 60.”

The manufacturer had been planning to move the 737 output into a similar range before two crashes of the 737 Max and the Covid pandemic sent it into a tailspin. On Wednesday, Boeing took a first step toward its ambitious targets by raising output to a 38 monthly rate, representing almost a quarter step-up from the pace that had been in place for much of the past year. 

Rival Airbus SE, which also reported earnings on Wednesday, said it wants to produce 75 of its A320 family aircraft by 2026. But the European company also removed an intermediate target to raise production past pre-Covid levels of 65 units, saying persistent volatility with supplies and workers complicate shorter-term planning.

Supplier Snags

Both planemakers are grappling with labor instability as new hires replace experienced Baby Boomers who retired or took buyouts during the Covid pandemic. And they’re settling into a world where supplier hiccups and parts shortages look to be the new normal. 

Boeing faced the additional strains from shutting down and restarting output of its 737 Max during a global grounding, severely squeezing industrial partners like Spirit AeroSystems Holdings Inc., which makes most of the plane’s aluminum frame. Airbus, meanwhile, has to contend with engine glitches, particularly with those supplied by RTX Corp.’s Pratt & Whitney subsidiary.

Still, the US company is seeing encouraging signs as it works to sync its suppliers and the Seattle-area factory, while starting up a fourth assembly line for the lucrative jetliner, executives said. Boeing’s main commercial business is on track to start generating an operating profit late this year or early 2024 after years of losses, they said.

“Right now, we’re just focused on stability” in factories and the supply chain, Calhoun said. “We want to have more capacity than we need.”

Boeing mapped out a series of production increases that would return its factories to near pre-Covid levels by the middle of the decade, reiterating a target of reaching 50 737 deliveries a month in 2025 or 2026. 

The steps are crucial if Boeing wants to reach Calhoun’s goal of generating $10 billion in free cash in that time frame to help pay down its huge debt load that still exceeds $50 billion.