Boeing Stock Falls Amid Disappointing News About 737 MAX Production

Late on Tuesday, Boeing stock took a hit as the stock market faced inflation concerns. Additionally, investors received some disappointing news regarding the production of the 737 MAX.

During the Cowen Aerospace Conference, Boeing CFO Brian West discussed the production of the 737 MAX on Tuesday. In a report by William Blair analyst Louie DiPalma, West's comments were summarized. It was noted that the CFO confirmed that Boeing's 737 MAX production would be below 38 planes per month for the first half of the year, gradually increasing to 38 planes per month by the end of 2024. Unfortunately, the conference was not open to the public, and Boeing has not yet provided any comments on this matter.

These numbers were slightly worse than what investors had anticipated. At the end of 2023, production levels had reached approximately 38 planes per month. Furthermore, Wall Street estimates project a total of 520 MAX deliveries in 2024, which is an increase from the 387 MAX jets delivered in 2023.

With a production rate of 38 planes per month, Boeing would manufacture a total of 456 planes. Although this falls short of the projected 520 deliveries, it's important to note that Boeing is still delivering planes that were built during the worldwide MAX grounding period, which lasted from March 2019 to November 2020.

By the end of 2023, Boeing had roughly 140 MAX jets in their inventory. Considering deliveries from both production and inventory, it is still feasible to reach the expected 520 deliveries set by Wall Street. However, it's important to acknowledge that there are various factors at play that could impact these numbers.

Boeing Aims to Increase MAX Jet Production

Boeing, the leading aircraft manufacturer, has set an ambitious goal of producing 50 MAX jets per month in the future. However, investors were not anticipating an immediate increase in production rates. The Federal Aviation Administration (FAA) has made it clear that it will only approve a production increase once it is satisfied with Boeing's production and quality processes. This decision was prompted by an incident on January 5th, when an emergency door plug blew out of a 737 MAX 9 jet operated by Alaska Air.

In addition to the FAA's scrutiny, more regulatory oversight has been implemented. Presently, there are 26 inspectors stationed in Witchita, Kan., and Renton, Wash., as DiPalma noted.

The assembly of the 737 MAX jets takes place in Renton, while the MAX fuselage supplier, Spirit AeroSystems, is situated in Witchita.

As a result of these developments, Boeing's stock has declined by 2.9% and is currently trading at $203.17. Spirit Aero stock has also experienced a 2% drop and is valued at $29.29. Similarly, the S&P 500 and Nasdaq Composite are both down, with decreases of 1.8% and 2.1%, respectively.

This market downturn can be attributed to the higher-than-anticipated January inflation numbers. Consumer prices in the U.S. rose by 3.1% year over year, exceeding economists' projections of 2.9%, according to FactSet data.