Key Points:

  • Boeing reveals that the deliveries of its 737 jetliners this year will be at the lower end of its initially targeted range of 400 to 450 jets due to recent issues with supplier Spirit AeroSystems Holdings Inc.

  • Boeing CFO Brian West communicates negative profit margins in Q3 for the company’s commercial and defense units, while maintaining an optimistic outlook for annual free cash flow, projected between $3 billion and $5 billion.

  • Despite the prevailing challenges with manufacturing defects and supplier issues, Boeing affirms the stability of its mid-decade production targets for the 737 and 787 Dreamliner, showcasing resilience in its strategic planning.

Boeing 737 Delivery Targets Impacted Due to Supplier Snag

ARLINGTON — At a recent investor conference, Boeing’s Chief Financial Officer, Brian West, revealed that this year, the deliveries of its prized 737 jetliner are expected to barely meet the lower end of its initially targeted range of 400 to 450 units, citing a supplier glitch as the cause. The recent snag involves supplier Spirit AeroSystems Holdings Inc., who reportedly improperly drilled some holes in 737 bulkheads, which are essential in sustaining cabin pressure.

West acknowledged during his address at the Jefferies conference that the third quarter will witness negative profit margins in the commercial and defense segments of the company. This adverse projection comes as Boeing grapples with manufacturing defects, potentially tracing back several years, including a prior issue from Spirit involving the brackets used to secure the 737’s vertical fin to the core fuselage.

Despite the hurdles, West expressed a sustained positive outlook, highlighting the company’s objective to generate free cash flow within the bracket of $3 billion to $5 billion in the current fiscal year. He assured that the mid-decade goals concerning the cash reserves and the production targets for both 737 and 787 Dreamliner remain unaltered, emphasizing the company’s resilient stance amid the ongoing challenges.

While addressing the recent concerns, West delineated the current state of the deliveries, stating that only 22 narrowbody jetliners were handed over in August. However, he conveyed an expectation to escalate the shipment to 70 jets within the third quarter, a move aimed at partially countervailing the previous delays.

Boeing had previously acknowledged last month the issues with Spirit AeroSystems, emphasizing that the anomaly would result in short-term delays in deliveries. At that point, the company had stated that it was in the process of assessing the repercussions of this glitch on its annual delivery target while working diligently to enhance output levels.