Boeing
stock fell Tuesday. The stock market was down amid inflation concerns, but investors also got some disappointing news about 737 MAX production.
Boeing CFO Brian West on Tuesday said at a conference that Max production would drop in the first half of 2024.
“Right now, we have a 38-per-month cycle the supply chain is cycling to,” said West. Boeing ended the year producing about 38 MAX jets a month and that is what Boeing suppliers are planning for.
”First-half [2024] output will be lower than that because we have to
acknowledge that we have lots of things to focus on in terms of keeping the airplanes in position longer so that we can incorporate all the
learnings that we’re finding,” added West. “Then in the second half, I fully expect us to move toward that 38 per month, but it will be dictated by the regulator.”
Below 38 a month for a period is a little worse than investors expected. Wall Street projects some 520 MAX deliveries in 2024, up from 387 MAX jets in 2023. At a rate of 38 a month, Boeing would make 456 planes. That is fewer than 520, but Boeing is still delivering planes built during the worldwide MAX grounding that lasted from March 2019 to November 2020.
At the end of 2023, Boeing had about 140 MAX jets in inventory. It is still possible for deliveries coming from both production and inventory to add up to 520—matching Wall Street expectations—but there are a lot of moving parts.
Eventually, Boeing wants to produce 50 MAX jets a month. Investors didn’t expect production rates to go up soon. The Federal Aviation Administration said it wouldn’t approve any production increase until it was satisfied with Boeing’s production and quality processes. That decision came after an emergency door plug blew out of a 737 MAX 9 jet operated by
Alaska Air
on Jan. 5.
That event led to more regulatory oversight as well. “There are currently 26 inspectors in Wichita, Kan., and Renton, Wash.,” William Blair analyst Louie DiPalma noted in a Tuesday report.
The 737 MAX jets are assembled in Renton. MAX fuselage supplier
Spirit AeroSystems
is based in Wichita.
Boeing stock closed down 2.3% at $204.46. Spirit Aero stock was down most of the day but rebounded late to gain 0.2% to $29.93. The
S&P 500
and
Nasdaq Composite
fell 1.4% and 1.8%, respectively.
The market was deeply in the red after a hotter-than-expected January inflation number. Consumer prices in the U.S. rose 3.1% year over year. Economists were projecting 2.9%, according to FactSet.
Write to Al Root at [email protected]
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