Boeing Hits New Snag in Production Push as Supply Chain Woes Mount

Boeing's production capacity has finally been lifted by the Federal Aviation Administration (FAA) after two years, but the company is now facing a new challenge in building faster. The FAA had previously taken away Boeing's authority to issue airworthiness certificates for its 737 MAX and 787 jets due to quality concerns. However, on July 20, the FAA restored this authority, allowing Boeing to resume issuing these certificates.

The company has since increased production to a rate of 47 aircraft per month in the second quarter and aims to reach 52 per month. However, Boeing's own guidance indicates that it is facing supply chain difficulties in reaching its target of 57 aircraft per month. This is a significant change from the previous constraint, which was imposed by the FAA.

Boeing's second-quarter results showed $24.6 billion in revenue and positive free cash flow of $0.6 billion, marking the first sustained positive reading in years. However, the company still reported a GAAP loss of $0.67 per share. The market has been slow to respond to Boeing's turnaround due to concerns about quality control and whistleblower issues.

The FAA's decision to restore Boeing's authority was a result of the company's commitment to prioritizing quality data over quarterly delivery targets. Boeing's CEO, Kelly Ortberg, has maintained this approach since taking office in August 2024. The company is now facing challenges in meeting its supply chain needs as it pushes to reach its production targets.