Boeing has started delivering MAX aircraft out of inventory again that have had rework done on the tailfin fitting issue. The airframer and supplier Spirit AeroSystems are dedicating lots of resources to the issue, but the problem is slowly being addressed, Chief Financial Officer Brian West said on Thursday during a Wolfe Research conference. Boeing starts delivering reworked MAX aircraft again.
“The times we thought it would on the front end and at the back end, which are very different cycle times, are holding firm. So that’s good progress, but there is still more work to do,” said West. He added that the costs for the rework are immaterial and have been booked in the Q1 results. In the financial statements, Boeing mentioned $188 million as a non-material charge.
Boeing delivered eighteen 737/MAX in April. “We still expect in the first half year to be about thirty a month and in the back half about forty per month. That puts us right within the range of our 400-450 deliveries for this calendar year. The range will be dictated by the recovery of this problem on the 737 fuselages, but so far so good,” West said.
Supply chain will not recover until 2025
Boeing’s free cash flow guidance of between $3.0 and $5.0 billion for this year is a ‘bit pressured’ as supply chain issues persist at Boeing Defense and Space. As President and CEO David Calhoun said earlier this week, the supply chain might take until 2025 to fully recover from the Covid crisis. “We had never counted on a full recovery this year or even next year. But we expect that by we get to 2025-2026 and our free cash flow guidance of $10 billion per year, we will get to normal.” He said the supply chain has got “better but is not health.”
The positive thing is that demand for aircraft remains strong. The MAX is sold out through 2026, which gives Boeing a strong position when it comes to pricing. On that topic, West said: “The environment that we are in right now is pretty good for price realization. The skyline continues to be moving to the right, which is a good dynamic. We will be disciplined on this topic, we know that the demand environment is favorable. As long as you stay disciplined, I think that the environment will be normal. But I remind you that in every sales campaign, we compete head-to-head (with Airbus). If you look at our track record recently, you feel really good about the wins.”
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
Richard is contributing to AirInsight since December 2018. He also writes for Airliner World, Aviation News, Piloot & Vliegtuig, and Luchtvaartnieuws Magazine. Twitter: @rschuur_aero.
