Boeing Increases Production of 737 Jets, Exceeds Expectations in Q2
In a significant move for the aerospace giant, Boeing announced plans to ramp up production of its 737 narrow-body jets. The company intends to build 38 jets per month, a notable increase from the previous rate of 31. This news comes as Boeing shares surged 7%, reaching a 1-1/2-year high, following the release of its second-quarter results, which surpassed Wall Street expectations.
Dave Calhoun, CEO of Boeing, stated that the production increase signifies a significant milestone and hinted at future rate boosts. While there are already preparations to raise monthly 737 production to 42, the specific timing for this expansion has yet to be confirmed. Boeing aims to stabilize its production lines before further rate increases, with ambitious plans to reach 47 jets per month by June 2024.
Nevertheless, Calhoun cautioned that supply chain constraints remain a concern, and previous quality issues and disruptions may lead to some delays in airplane deliveries. However, Boeing’s increased deliveries of the 787 Dreamliner have contributed to an upswing in revenue in its commercial planes division.
On the other hand, margins in Boeing’s defense business suffered due to cost overruns, resulting in negative figures. Consequently, the company took charges related to various projects. Looking ahead, Boeing expects to deliver most of the 228 MAX jets in its inventory by the end of 2024, with a significant portion designated for Chinese customers.
The second quarter brought positive news for Boeing, as the company reported positive free cash flow, a stark contrast to the cash burn experienced the previous year. Additionally, the adjusted loss per share was narrower than anticipated. As a result, Boeing reaffirmed its plan to generate $3 to $5 billion in free cash flow this year and deliver a certain number of single-aisle 737s and 787 Dreamliners in 2023.
Boeing’s efforts to increase production and deliver more aircraft demonstrate its commitment to overcoming challenges in this post-pandemic era. With a positive outlook for its commercial planes division and ambitious growth plans, the aerospace giant hopes to regain its footing and meet the demands of the aviation industry.
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