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Supply Chain Pains Hit Boeing 737 MAX Delivery Forecast

Coming off a successful Farnborough Air Show last week that saw Boeing reel in several orders for its airliners, the company has been forced to cut production short because of supply chain disruptions.
737 MAX 6 photos
Photo: Boeing
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Estimates earlier in the year for the 737 Max put deliveries at 500 for 2022. However, that number has been scaled down to 400-plus due to the reduction at their Renton, Washington assembly plant. The company now plans to maintain a monthly production rate of thirty-one 737 MAX planes in an effort to not lag too far behind strong demand.

Boeing's CFO Brian West told investors the company has an increased presence at supplier locations and teams of experts to address the supply issues with engines, raw materials, and semiconductors. But analysts worry the efforts may not be sufficient to enable boosting production.

"We continue to experience real constraints," Brian West, Boeing's chief financial officer, told investors on an earnings call, reported by Reuters.

In addition to the supply issues, Boeing is awaiting a decision by the U.S. Government on whether the newest and largest variant of the 737 family, the 737 MAX 10 will be certified before a December deadline. Without winning a certification, extensive and costly cockpit safety improvements would need to be made. Congress could grant an extension to the two-year grace period afforded in the 2020 Aircraft Certification, Safety and Accountability Act, but it faces opposition.

The talk of the Farnborough show was much more about supply chain issues than new airplane orders. Although, Boeing was the clear winner in sales booking commitments for over 200 aircraft in total.

European competitor Airbus received far fewer orders at the event in the UK, and on Wednesday halted production plan increases and cut back its own airplane delivery forecast for the year. However, the company is positioned well with its A321neo, if Boeing fails to get the MAX 10 certified.
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