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Investors eye Boeing’s production outlook and delivery schedule

By Valerie Insinna and David Shepardson

WASHINGTON (Reuters) – As Boeing battles disruptions in its supply chains, investors will be looking to the largest U.S. planemaker to answer questions about its planned commercial jet ramp-up and put aside concerns about losses on major defense projects when it announces its launch on Wednesday reports results.

Boeing has seen a rapid recovery in customer demand for 737 MAX after two crashes and the COVID-19 pandemic ravaged the airline industry. Chief Executive Dave Calhoun said in October Boeing had “toned down those existential moments.”

According to data from Refinitiv, Boeing will report fourth-quarter revenue up to $20.38 billion from $14.79 billion in the year-ago quarter, with earnings of 26 cents a share.

However, analysts warn that Boeing still faces a major risk of ramping up aircraft production as supply chain recovery and additional regulatory requirements could delay schedules.

“It’s not just a simple production recovery story,” said Richard Aboulafia, an analyst at Aerodynamic Advisory, who pointed to Boeing’s backlog of hundreds of undelivered 737 and 787 planes sitting in storage.

Boeing plans to ramp up production of its flagship 737 MAX family of narrow-body airplanes, which make up most of the company’s sales volume, from 31 airplanes per month to about 50 by 2025. Executives previously pointed to supply chain bottlenecks as the main reason behind the delay in 737 MAX production, and investors will be listening for details on how many planes are expected to be manufactured and delivered this year.

Investors will also be waiting for Boeing to shed some light on why it’s taking so long to deliver MAX planes that are sitting in storage. The Federal Aviation Administration still inspects each MAX individually before it can be shipped.

“It looks like this isn’t progressing as fast as they would like,” said Robert Stallard, an analyst at Vertical Research.

The 787 Dreamliner program, which resumed deliveries in August after an 11-month hiatus, is facing similar questions regarding its planned increase to 10 widebody aircraft per month by 2025.

Boeing intends to gradually ramp up production of the 787 to five a month, but slowed production after a parts delay in December, Reuters previously reported.

To obtain FAA approval to resume 787 deliveries, Boeing agreed to retrofit aircraft to meet certification requirements and to subject those aircraft to FAA inspections prior to delivery. Investors may wonder whether these requirements could potentially incur additional costs.

Boeing delivered 480 aircraft in 2022, behind competitor Airbus’ 661. Both aircraft manufacturers fell short of analysts’ expectations.

In the first three quarters of 2022, Boeing has racked up around $4.4 billion in losses from defense programs with high manufacturing costs and labor shortages. Investors are skeptical that Boeing can meet costs and schedule in this deal.

(Reporting by Valerie Insinna and David Shepardson, Editing by Ben Klayman and Nick Zieminski)


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