© Reuters. FILE PHOTO: Boeing’s new 737 MAX-9 is pictured under construction at their production facility in Renton, Washington, U.S., February 13, 2017. REUTERS/Jason Redmond/File Photo
WASHINGTON (Reuters) -Boeing Chief Financial Officer Brian West said Tuesday the company will move to a steady 737 production rate of 38 aircraft per month in the second half of 2024 after slowing the line following last month’s mid-air cabin blowout on a 737 MAX 9.
Lower aircraft delivery volumes, customer considerations paid to airlines as a result of the MAX 9 grounding, and the company’s need to hold additional inventory from its supply chain will all contribute to cash usage in the first quarter, West said during the Cowen Aerospace & Defense Conference.
Previously, Boeing (NYSE:) said it was “cycling” at a rate of 38 narrowbody 737s a month, but West said that the planemaker is having to periodically pause the line as it focuses on quality in the wake of the incident.
“We have to acknowledge that we have lots of things to focus on in terms of keeping the airplanes in position longer so that we can incorporate all the learnings that we’re finding, and that’s just fine,” West said, adding that it will be up to the Federal Aviation Administration to approve future rate increases.
Boeing shares were down 2.3% in morning trade.
The FAA launched an audit of Boeing’s 737 production line following the Jan. 5 accident where a door plug detached from a brand new MAX 9. It has also prohibited Boeing from increasing its MAX production rate without FAA permission.
Boeing’s suppliers are set this month to increase production of components to make the 737 to the levels necessary to build 42 planes a month. West said the planemaker has the cash necessary to handle the spike in extra inventory to keep its supply chain on solid ground.
If Boeing’s suppliers keep ramping up production as planned, “they will be in a much more stable position to be able to not have some of the issues that have been hampering us historically,” he said.