Boeing, the aerospace giant, has announced a six-month delay in reaching a key production milestone for its best-selling 737 MAX aircraft. The company informed suppliers that it now aims to achieve a monthly output of 42 jets by March 2025, pushing back the previous target of September 2024. This delay signals the ongoing challenges Boeing faces in ramping up production of its popular aircraft.
While the company maintains that its master schedule serves as a demand signal and not an official production target, the delay suggests potential difficulties in meeting the anticipated demand. In July, Boeing CFO Brian West acknowledged the adjustments being made to the master schedule, stating, “We continue to make adjustments as needed and manage supplier by supplier based on inventory levels.” He further emphasized the company’s objective of keeping the supply chain ahead of final assembly to ensure production stability.
This latest production setback comes amidst a series of challenges facing Boeing. A mid-air incident in January, involving a door panel blowing off a 737 MAX, has had a significant impact on the aviation industry and raised concerns about the aircraft’s safety. In response, Boeing announced plans to implement design changes to prevent similar incidents in the future.
Adding to the pressure, Boeing is also facing potential labor unrest. A tentative labor agreement reached between Boeing and one of its largest unions has left many workers dissatisfied. Union members are seeking higher wage increases and improved pensions. A crucial vote on the agreement is scheduled for Thursday, with the possibility of a strike still looming.
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In premarket trading on Tuesday, Boeing shares (BA) are down 0.26% at $162.49. The company’s recent production delay and potential labor issues will likely be closely watched by investors and analysts in the coming weeks and months.
