Boeing Faces Delivery Drop in August Amid Manufacturing Defect Challenges
In August, Boeing faced a dip in its delivery numbers, with only 35 planes handed over to customers, marking its lowest figure since April. This setback can be attributed to the significant efforts required to rectify a manufacturing defect affecting its bestselling 737 MAX aircraft.
For the first eight months of 2023, Boeing managed to deliver a total of 344 planes, representing a notable increase compared to the same period the previous year when production was hampered by the pandemic. In contrast, European competitor Airbus(AIR.PA) achieved 433 aircraft deliveries during the same eight-month period, with 52 of those occurring in August.
August’s Delivery Breakdown:
August’s deliveries included just 22 narrowbody 737s MAXs, with one of them being a Boeing Business Jet. Boeing’s CFO, Brian West, mentioned that the company is likely to be at the “low end” of its target range of 400-450 737 deliveries for this year. This decrease is attributed to the meticulous inspection and repair process required to address thousands of misdrilled holes on the 737 MAX 8 aft pressure bulkhead.
New Orders and Cancellations:
Boeing secured new orders for 43 planes in August, accounting for two cancellations. Notably, this figure incorporates a previously undisclosed sale of 25 737 MAX 8 planes to aircraft lessor SMBC Aviation Capital. Airbus, in comparison, recorded 117 plane sales during the same month.
Apart from the 737 MAX, Boeing also handed over 13 widebody jets in August. These included five 787 Dreamliners, three 767s (comprising three KC-46 tankers for the U.S. Air Force and two freighters for FedEx), as well as three 777 freighters.
Investors closely monitor delivery statistics since the majority of payment for an aircraft is received when it is transferred to the customer.
Order Bookings and Backlog:
Boeing’s gross orders since the beginning of January increased to 624 by August, with 510 net orders considering cancellations and conversions, and 737 net orders after accounting adjustments. In contrast, Airbus reported 1,257 gross orders or 1,218 after cancellations. Boeing’s commercial backlog also grew from 4,928 to 4,971.
In conclusion, Boeing faced delivery challenges in August, primarily due to the ongoing efforts to address a manufacturing defect in the 737 MAX. While deliveries dipped, the company continues to secure new orders and expand its commercial backlog as it navigates through these challenges.