Boeing powers ahead as MAX 8 inventory thins

As we approach the end of a short month, Boeing's deliveries are powering ahead. [caption id="attachment_89945" align="aligncenter" width="580"] AirInsight[/caption] The delivery rate is important, but so is the breakdown. Airbus is also delivering well. Its A220 is way ahead of Embraer's E2 models. In our view, the A321NX remains Airbus' most valuable program. For Boeing, the key item is the MAX 8. Boeing is clearing out its inventory. As we explained last week, moving these aircraft out is essential to the program's recovery. [caption id="attachment_89946" align="aligncenter" width="561"] AirInsight[/caption] Inventory shrink To explain the importance of clearing the inventory, let's look at our delivery day metric. The chart shows a spike at Boeing as older aircraft are delivered. A cursory glance gives the impression that things are not improving at Boeing. [caption id="attachment_89949" align="aligncenter" width="640"] AirInsight[/caption] So, let's break down Boeing's YTD deliveries. The left table lists the customers in descending order, and the right table lists delivery days in descending order. We highlighted old inventory that has been moved out. Several deliveries have deals that can be described as "opportune," meaning they must have been screaming deals for the customer. The tables are not complete and run quite a bit further down. However, the data shown provides sufficient evidence to support the points. [caption id="attachment_89950" align="aligncenter" width="640"] AirInsight[/caption] Cashflow is King Are those "screaming deals" a problem? Not necessarily. Boeing must get that inventory out to customers. It has a fortune of capital tied up in that inventory, and cash is more valuable. Moreover, some of Boeing's finest production problem solvers are setting up inventory airplanes for delivery at the ghost factories. That talent is better deployed at Renton and Everett, focusing on new production. The right table shows Boeing is back in under 50 days for many deliveries. For context, Airbus is at 25 days YTD. Boeing has a way to go to reach that rate and must be competitive. Boeing can move from ~50 days to half that by returning its talent pool to the FALs. Eliminating the inventory is crucial. Boeing's MAX issues are sunk costs and recovering value is essential. Moreover, servicing and supporting the fleet offers a long-term revenue recovery. MAXs can only use Boeing-approved parts and be maintained at Boeing-approved MROs. Therefore, getting the airplanes into customers' hands is job #1. When done, the revenue stream starts, and an essential change in cash flow ensues. We talk a lot about the MAX; the same applies to the 787. The TAAG delivery is an example of a 787-9 with a history. Initially destined for MIAT in Mongolia, it was then repainted in Riyadh colors. A potential orphan found a home and now generates revenue. Everyone wins. Clearing the deck Kelly Ortberg has set out the goals for 2025. The linked article offers several quotes that parallel our thinking described above. Our view is driven primarily by the data and supported by what we hear from the supply chain. Ortberg is doing everything he can to clear the deck. This quote speaks louder when one looks at the data shared above. “As I talk with employees, there’s a growing swell of excitement around restoring trust and getting their Boeing back,” Ortberg said. Every tunnel comes to an end. Looking ahead, the work effort remains intense. The MAX 7 and MAX 10 need certification, and the 777X also needs certification. Customers are openly dissatisfied, but where else can they go? Airbus appears to have flubbed these opportunities to grab customers and win an insurmountable lead for the next 20 years. Boeing will not give Airbus a second opportunity.

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 -

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