Boeing announced a reduction in its forecast for 737 Max aircraft deliveries for the year, citing production flaws detected in some of its bestselling aircraft. This announcement marks a significant setback for the company and its airline customers, who are eagerly awaiting the delivery of new, more fuel-efficient jetliners. The company now expects to deliver between 375 and 400 aircraft, down from its previous estimate of 400 to 450.
The reduction in delivery forecasts comes amidst ongoing production issues for Boeing, as the company grapples with production flaws in its 737 Max aircraft. The flaws, which include misdrilled holes in the fuselages produced by Spirit AeroSystems, have led to significant challenges for Boeing as it works to meet the demand for new planes in the wake of the COVID-19 pandemic.
Despite these production challenges, Boeing’s CFO reaffirmed the company’s expectations for a 2023 free cash flow of $3 billion to $5 billion. This optimistic outlook is in contrast to the company’s share performance, which saw a decline of more than 1% in morning trading following the announcement.
CEO Dave Calhoun addressed the production issues in an employee note, stating, “I have heard those outside our company wondering if we’ve lost a step. I view it as quite the opposite. Most importantly, we’ve worked hard to instill a culture of speaking up and transparently bringing forward any issue, no matter the size so that we can get things right for the future.” He went on to say that the company is now equipped to fix the issues “once and for all.”
The challenges Boeing faces in its 737 Max productions indicate the broader difficulties the aviation industry faces as it recovers from the impacts of the COVID-19 pandemic. With the reduction in delivery forecasts, Boeing has acknowledged the scale of the problem and is taking steps to address it. The company’s commitment to transparency and fixing the issues at hand is a positive sign for its future as it works to regain the trust of its customers and shareholders.
