FAA update on Boeing sends positive signal

Last week, the FAA said that it would allow Boeing to begin issuing airworthiness certificates for the 737 MAX and 787. This is NOT an approval of a rate increase to 42/month on the MAX. However, there's reason to believe this FAA update is a positive statement. Moreover, it likely provides support for the confidence that Boeing is now positioned to achieve a rate of 42/month on the MAX in 4Q25. The FAA revoked this authority for the MAX in 2019, following two fatal crashes caused by faulty software, and for the 787 in 2022 due to production quality issues. FAA Decision With the FAA delegating airworthiness certificates to Boeing, the FAA's inspectors will focus additional resources on the production process (production quality and safety measures). Under Organization Designation Authorization, trusted manufacturers can issue airworthiness certificates on behalf of the FAA if they meet stringent compliance requirements. The FAA's decision likely supports Boeing from a resource perspective. As Boeing's ghost factories close down and its talent pool relocates to Renton, the FAA recognizes that Boeing's internal skills pool is improving. This combination of developments is a base for growing confidence in Boeing's ability to reach 42/month for the MAX program in 4Q25. We have been watching this closely. RBC notes that Boeing has a LEAP engine inventory to support MAX production at a rate of 47/month. RBC further notes that the aerospace supply chain remains tight and believes there are aspects of the supply chain that still lack consistent delivery schedules; however, the outlook is improving. Conclusion The FAA's decision is yet another piece, indeed a critical piece, of good news for Boeing. Last week, we spent some time explaining how the news was improving before the FAA's decision. While the 787 is essential to Boeing, the MAX is clearly its top priority. This chart shows Boeing's steady progress on the MAX this year. Deliveries have risen, and the delivery days metric rose as aging inventory was delivered. [caption id="attachment_113215" align="aligncenter" width="640"] AirInsight[/caption] Deliveries are the items we focus on most. However, when it comes to MAX, due to the FAA's rate limit, it is essential to examine Boeing's production of the MAX. Using first flight numbers as a production proxy, we can see Boeing has been able to meet or exceed the FAA's limit handily. This is why the FAA's confidence has grown. Note that the September number has a few days left for a whole month. [caption id="attachment_113216" align="aligncenter" width="580"] AirInsight[/caption] A final thought focusing on evervescent critic, Mr. Michael O'Leary. There is no more biting critic of Boeing's fumbles than Ryanair's CEO. Even he appears mollified by Boeing's successful recovery so far.

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