A Boeing 737 MAX 7 is displayed in February in Renton. (AP Photo/Elaine Thompson, file)

A Boeing 737 MAX 7 is displayed in February in Renton. (AP Photo/Elaine Thompson, file)

Boeing faces new production snarls for cash-cow 737 jetliner

The planemaker has about $1.8 billion of 737 inventory sitting on the tarmac at Renton.

By Julie Johnsson / Bloomberg

Boeing is working through cascading supplier problems that will hamper third-quarter deliveries of its 737 jetliner, the planemaker’s largest source of profit.

Airbus SE and Boeing are starting to feel the consequences of a record-breaking output surge for their narrow-body aircraft as suppliers struggle to keep pace. Airbus parked about 80 of its popular A320neo family — down from a peak of 100 jetliners — as it awaited delayed engines from Pratt & Whitney.

Hiccups at the suppliers that provide the fuselage and engines for Boeing’s 737, combined with record output, have contributed to a production logjam at the planemaker’s Seattle-area factory. At least 40 unfinished aircraft are parked around the facility and an adjacent air strip as mechanics scramble to install parts that arrived late or out-of-sequence, The Seattle Times reported last week.

Boeing now expects to deliver fewer of the 737 than it makes during the third-quarter, before accelerating shipments by the end of the year, said Greg Smith, Boeing’s chief financial officer. The company is working to streamline production at the Renton factory where it assembles the narrow-body aircraft, while also investing to help suppliers tackle bottlenecks.

At the 52-jet monthly production tempo that Boeing adopted in recent months for its 737, “a day, an hour, two hours matter,” Smith told a Jefferies conference Wednesday. “We have a recovery plan in place for them and us, and it’s about executing on that plan.”

The planemaker’s shares dipped 1.2 percent to $346.72 at 12:39 p.m. in New York.

Among the supplier glitches confronting Boeing are airframes shipped hours late or out-of-sequence by Spirit AeroSystems Holdings. CFM International, an engine maker venture of General Electric Co. and France’s Safran SA, has also fallen a few weeks behind schedule in its Leap engine shipments to both planemakers.

All told, Boeing has about $1.8 billion of 737 inventory sitting on the tarmac at Renton, Ron Epstein, an analyst with Bank of America Merrill Lynch, said in an Aug. 6 report.

“The problem may likely get worse for Boeing before it gets better,” Epstein wrote. “That said, Boeing is building inventory until it receives engines and other components; however, once the parts arrive and deliveries are made, Boeing will have large cash inflows from airline customers and working capital.”

With the 737 Max and A320neo family jets largely sold out through 2024, Boeing and Airbus are contemplating another set of production step-ups next decade. While the European planemaker has publicly discussed boosting output to a 70-jet or even 75-jet pace, Boeing has been more cautious.

The Chicago-based planemaker is studying the capital investment, tooling and supplier hurdles it would need for future rate hikes – as well as how long the higher output could be sustained, Smith said.

“The demand is there,” he said. “But if your supply chain and yourself can’t meet that demand, there is no upside.”

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

The livery on a Boeing plane. (Christopher Pike / Bloomberg)
Former Lockheed Martin CFO joins Boeing as top financial officer

Boeing’s Chief Financial Officer is being replaced by a former CFO at… Continue reading

Izaac Escalante-Alvarez unpacks a new milling machine at the new Boeing machinists union’s apprentice training center on Friday, June 6, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Boeing Machinists union training center opens in Everett

The new center aims to give workers an inside track at Boeing jobs.

Some SnoCo stores see shortages after cyberattack on grocery supplier

Some stores, such as Whole Foods and US Foods CHEF’STORE, informed customers that some items may be temporarily unavailable.

People take photos and videos as the first Frontier Arlines flight arrives at Paine Field Airport under a water cannon salute on Monday, June 2, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Water cannons salute Frontier on its first day at Paine Field

Frontier Airlines joins Alaska Airlines in offering service Snohomish County passengers.

Amit B. Singh, president of Edmonds Community College. 201008
Edmonds College and schools continue diversity programs

Educational diversity programs are alive and well in Snohomish County.

A standard jet fuel, left, burns with extensive smoke output while a 50 percent SAF drop-in jet fuel, right, puts off less smoke during a demonstration of the difference in fuel emissions on Tuesday, March 28, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
Sustainable aviation fuel center gets funding boost

A planned research and development center focused on sustainable aviation… Continue reading

Helion's 6th fusion prototype, Trenta, on display on Tuesday, July 9, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
Helion celebrates smoother path to fusion energy site approval

Helion CEO applauds legislation signed by Gov. Bob Ferguson expected to streamline site selection process.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.