Deliveries Expected To Slow In The Third Quarter Of This Year

Some production snags are forcing Boeing to anticipate a slowdown in deliveries of their workhorse 737 airliners in the third quarter of this year before the pace picks up again by year's end.

Problems in the supply chain on fuselage components and engines are being cited for the slowdown as Boeing deals with a large number of orders and its fastest-ever production rate of 52 single-aisle jets per month. MSN reports that during a Jefferies conference Wednesday, Boeing CFO Greg Smith said the company is exploring ways to streamline production while dealing with bottlenecks in the supply chain. "We have a recovery plan in place for them and us, and it's about executing that plan," Smith said.

The snags can stem from problems that might seem small, such as airframes being shipped by Spirit AeroSystems late by only a few hours or out of sequence. Shipments of the LEAP engines produced by the Engine Alliance are also a few weeks behind schedule.

Boeing has airplanes valued at some $1.8 billion sitting on the tarmac at Renton, WA, according to industry analyst Ron Epstein, who said that the problem is likely to get worse before it gets better.

Airbus is facing similar supply chain problems for its A320neo, according to the report.

Still, positions for Boeing's 737 MAX and the A320neo are essentially sold out through 2024, and both planemakers are considering additional increases in their production rates. Airbus has publicly discussed an output of as many as 75 airplanes per month, while Boeing has been more conservative, according to the report.

(Image from file)

FMI: Original report