Boeing lowers 737/MAX delivery guidance to 375-400 aircraft

UPDATE - Boeing has lowered the full-year guidance of 737/MAX deliveries to 375 to 400 aircraft, down from the original target of 400-450 deliveries in 2023. Necessary inspections and rework in multiple areas on already produced aircraft are taking so much extra time that the delivery target is no longer realistic. Deliveries of the 787 are still on track to reach 70-80 this year, Boeing said on Wednesday in its Q3 earnings release. Boeing has been confronted with various production quality issues on the 737 P-8A and MAX. In April, vertical tailfin fittings were found to be non-conforming to specifications. This required rework on fuselages at Spirit AeroSystems and on aircraft in assembly with Boeing in Renton. On aircraft that had already been assembled, tailfins had to be removed. In August, another non-conformance was identified on the aft pressure bulkhead section. Machined-drilled fastener holes were found to be oblong and needed X-ray inspections and corrections. Chief Financial Officer Brian West said in September that the rework was taking longer than expected. Later, manually drilled holes were also found to be non-conforming. It was evident that Boeing had a steep mountain to climb if it wanted to meet the delivery target of 400-450 737s and MAX aircraft set out in January. At the end of September, 286 aircraft had been delivered, so this left Boeing with 114 to go to meet the lower end of the guidance. Today, Boeing says: “Near-term deliveries and production will be impacted as the program performs necessary inspections and rework, and the company now expects to deliver 375-400 airplanes this year.” At the same time, Boeing continues to ramp up the production rate of the 737/MAX program. “The company expects to complete the final assembly transition to 38 per month by year-end, with plans to increase to 50 per month in the 2025/2026 timeframe. The estimated cost associated with performing the rework is immaterial and included in third-quarter results. The 787 program is now transitioning production to five per month and plans to increase to 10 per month in the 2025/2026 timeframe. The program still expects to deliver 70-80 airplanes this year.” BCA continues to see red Due to the production issues, Boeing Commercial Aircraft (BCA) posted another loss-making quarter. BCA reported a $-678 million operating loss for Q3 compared to $-622 million in the same period of 2022. The operating margin was -8.6 percent. Revenues were up 25 percent to $7.876 billion from $6.303 billion. For January-September, BCA reported a $-1.676 billion operating loss versus $-1.738 billion. The operating margin was -7.2 percent, an improvement over last year’s -10.4 percent. Revenues grew to $23.420 billion from $16.755 billion. Boeing booked 398 orders in Q3, including 150 MAX 10s from Ryanair, 50 787s from United Airlines, and 39 787s from Saudia. Q3 deliveries totaled 105, down from 112 last year, with 9M deliveries up to 371 from 328 last year. Boeing consolidated results Boeing halved its consolidated Q3 net loss to $-1.638 billion from $-3.308 billion. The operating loss was $-808 million, down from $2.792 billion. The operating margin improved to -4.5 percent from -17.5 percent. Revenues grew 13 percent to $18.104 billion from $15.956 billion. For the first nine months, the net loss was down to $-2.212 billion from $-4.390 billion. The operating loss was $-1.056 billion versus $-3.174 billion, resulting in an operating margin of -1.9 percent. Revenues were up by 20 percent to $55.776 billion from $46.628 billion, thanks to better sales from all business units. The operating cash flow took a hit in Q3 and was down to just $22 million from $3.190 billion last year, which according to Boeing “is reflecting less favorable receipt timing, including the absence of a prior year tax refund.” The 9M period saw the opposite trend with $2.579 billion versus $55 million last year. Free cash flow was down to $310 million from $2.906 billion in Q3 and up to $1.483 billion from $841 million for 9M. Cash and cash equivalents stood at $13.4 billion by late September compared to $13.8 billion by late June. It has undrawn credit facilities of $10 billion. Net debt remained unchanged at $52.3 billion. Earnings per share were $-3.64 for the nine-month period versus $-7.24 in the same period of 2022. More cost overruns for the VC-25B Boeing Defense & Space reduced its loss in Q3, reporting an operating loss of $-924 million versus $-2.798 billion. The 9M operating loss was also down, to $1.663 billion from $-3.656 billion. BDS suffered another $482 million loss on the VC-25B Air Force One program “driven by higher estimated manufacturing cost related to engineering changes and labor instability, as well as resolution of supplier negotiations.” BDS also suffered higher costs of $315 million on a satellite contract “due to estimated customer considerations and increased costs to enhance the constellation and meet lifecycle commitments.” The KC-46 tanker program saw improved stability and productivity. Q3 revenues were up by three percent to $5.481 billion or by seven percent to $18.187 billion for 9M. Boeing Global Services is the only business unit to report a profit. Q3 saw an operating profit of $784 million, up from $733 million last year, with 9M profits up to $2.487 billion from $2.093 billion. Revenues grew nine percent in both Q3 and 9M to $4.812 billion and $14.728 billion respectively. BGS won $5.0 billion in new orders and has a backlog of $18 billion. For the full year, Boeing reiterates its guidance for consolidated operating cash of $4.5 to $6.5 billion, Capex of $1.5 billion, and a free cash flow of $3.0 to $5.0 billion. Due to the lower 737 and MAX deliveries, FCF will be at the lower end of the guidance. BCA and BGS operating cash flows are expected to be up, with those of BDS down. R&D expenses are guided to be up to $3.4 billion from $3.2 billion, thanks to work on the 777X program/777-8F freighter. In a message to Boeing staff, President and CEO David Calhoun said: “We continue to make progress and despite the challenges that came our way in the third quarter, we remain on track in our long-term recovery. That said, we have more work to do. Lower commercial deliveries and continued challenges in our defense business impacted results in the quarter.” “To finish the year strong and head into 2024 well positioned, it is important we continue to improve operational performance and drive stability in our supply chain so we can meet our customer commitments.”

US Flight Planner - US DoT On-Time Data	Airbus vs Boeing - Official OEM Data
US Airline Schedule Performance - US DoT Data	Daily OEM Production & Deliveries -

Subscribe To Our Newsletter

Related News

Subscribe To Our Newsletter

Related News

A220: Strong Execution, Constrained Scale

The MAX 10 Is Coming for Airbus’ Crown Jewel

MAX 7 & 10 – The End of FAA Bilateral Hegemony?