Boeing Faces Production Delays on 737 Max Due to Wing Manufacturing Issues

Boeing's CEO Kelly Ortberg has admitted that the company is not yet ready to ramp up production of its bestselling jet, the 737 Max. Speaking at Morgan Stanley's 14th Annual Laguna Conference on September 16, Ortberg revealed that the bottleneck in production is the wing manufacturing process. Boeing builds every wing for the Max program in Renton, Washington, and Ortberg stated that the flow of finished wings has not sped up as planned.

The company currently produces 47 jets per month, but it wants to increase this figure to 52. However, Ortberg warned that reaching this goal may take longer than expected due to the wing production issues. Boeing's CFO Jay Malave echoed this caution on the company's Q2 earnings call on July 28.

The delay in ramping up production is a concern for investors as it could impact Boeing's cash flow guidance and its ability to meet its long-term targets. The company needs to achieve higher production rates to generate more revenue and customer payments. Ortberg stated that the existing Renton line and a newly opened north production line in Everett need to be running well before moving to rate 52.

Additionally, Boeing's contract with its engineering union, SPEEA, expires on October 6, which could lead to a potential strike. Ortberg warned that a strike would have a ripple effect on the business and potentially shut down the 777 certification program. The company has a contingency plan in place but may not be able to sustain current rates during a walkout.