By Dan Catchpole and Shivansh Tiwary
SEATTLE, Sept 16 (Reuters) – Boeing CEO Kelly Ortberg said on Wednesday it is taking “longer than expected” to stabilize the 737 MAX production rate at its target of 47 jets a month, and downplayed expectations that China would announce a large jetliner order during a political summit next week.
Boeing’s share price dropped about 2.25% immediately after his comments. The price closed down 4% for the day.
Increasing output of the popular single-aisle jetliner is critical to the company’s financial recovery after years of crises that have left it with nearly $26 billion in net debt and a bruised reputation.
The company has not been able to make 737 wings fast enough to consistently feed the higher rate of 47 jets a month, Ortberg said.
Boeing needs to speed up wing production and certify its new 737 production line in Everett, Washington, in order to raise output to 52 jets a month next year, he said, adding that the supply chain can support the move.
Speaking at a conference hosted by Morgan Stanley, Ortberg said that the largest variant of the 737 MAX, the 737-10, will be certified “very soon.” Certification of the 737-10 is several years behind schedule and makes up about 30% of all 737 orders. In August, U.S. regulators certified the smallest variant, the 737-7.
In addition to inconsistent 737 production, Boeing’s plan to increase 787 Dreamliner production to 10 jets a month is taking longer than expected due to engine shortages. The company is currently producing eight of the twin-aisle jets a month, but slow certification of premium seats has reduced deliveries, Ortberg said.
“So, I think you’re going to still see us, even though we may have a pretty good roll out rate of eight a month, you’re going to see us be a little bit lumpy here month to month on 787 delivery,” he said.
The slower 737 and 787 rate increases mean that Boeing likely will not get to $3 billion in free cash flow, the upside of its guidance given in January, and instead generate $2 billion, the midpoint of its guidance, Boeing Chief Financial Officer Jay Malave said.
Ortberg also downplayed some expectations among industry analysts that China could make another Boeing order when President Donald Trump meets Chinese President Xi Jinping in Washington next week.
China committed to 200 jets when they met last May in Beijing.
Speaking separately at the conference, Tom Doxey, chief financial officer of Southwest Airlines, the first airline to take the MAX 7, said some deliveries should start around the end of 2026, with entry into service expected in early 2027.
Boeing has already built 27 MAX 7s for Southwest and is preparing them ahead of delivery, he said.
(Reporting by Dan Catchpole in Seattle and Rajesh Singh in Chicago. Editing by David Gregorio, Jonathan Spicer and Nia Williams)
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