Boeing Faces Production Challenges with 737 MAX Jetliner
Boeing’s 737 MAX jetliner production has experienced a recent decline, attributed to increased scrutiny from US regulators and efforts to address outstanding issues in assembly, according to industry insiders.
FAA Production Cap and Output Rate
- Sources familiar with the matter revealed that the Federal Aviation Administration (FAA) has imposed a production cap of 38 jets per month.
- The output rate has fluctuated well below this benchmark, dropping to single digits by late March.
Quality Concerns and Stakeholder Confidence
Boeing’s Chief Financial Officer, Brian West, mentioned that the company is actively addressing quality concerns and working to enhance confidence among stakeholders.
West highlighted that the FAA is conducting rigorous audits, describing it as “undertaking a tougher audit than anything we’ve ever been through before”.
Impact on Production and Deliveries
Boeing’s efforts to reduce “travelled work” have inadvertently slowed production and subsequent deliveries, with the stock seeing a 1.7% decline after increased scrutiny.
The production slowdown is expected to have ripple effects throughout the airline industry, potentially causing carriers to adjust flight schedules or extend existing jet leases to meet demand.
Comparison with Airbus Production
While Boeing faces production challenges, Airbus is maintaining a comparatively strong production rate for its A320neo-family jets, flying an average of 46 per month in the first quarter.
Airbus has extended a comfortable lead in the single-aisle jet market amid Boeing’s difficulties.
CFM International’s Monitoring
CFM International, the sole engine supplier for the MAX, is closely monitoring the situation, with questions remaining about the sustainability of engine deliveries and potential surpluses.
Implications for CFM International
The extended production slump at Boeing poses significant implications for CFM International and its stakeholders, with concerns about the accumulation of surplus engines amid the current slowdown.