Boeing announced on Wednesday that it will deliver fewer 737 Max aircraft this year than expected due to production flaws detected on the fuselages of some of the bestselling aircraft. The company expects to hand over 375 to 400 of its workhorse planes this year, down from a previous estimate of 400 to 450.
The production flaws result from misdrilled holes in the fuselages, which Spirit AeroSystems produces. Boeing has been working with Spirit to fix the problems, but they have caused delivery delays. Boeing is also facing challenges in its defense unit, losing money due to higher production costs on the Air Force One program and a satellite contract.
The production flaws in the 737 Max fuselages are a setback for Boeing, which is trying to ramp up output of the plane to meet demand for a recovery in air travel after the COVID-19 pandemic. The delays could also hurt airline customers eager to receive new. The challenges in Boeing’s defense unit are also concerning. The company is already under pressure to improve its margins in that business.
The production flaws in the 737 Max could delay plane deliveries to airline customers. It could have a negative impact on the airlines’ operations and bottom lines. Boeing’s defense unit challenges could also impact the company’s bottom line. If Boeing is unable to improve its margins in that business, it could lead to lower profits for the company overall.
Boeing’s shares were down less than 1% in afternoon trading on Wednesday despite the company’s announcement that it will deliver fewer 737 Max aircraft this year. This suggests that investors are still willing to give Boeing the benefit of the doubt, even though the company is facing some challenges.
Boeing is facing some challenges in both its commercial and defense businesses. However, the company is still well-positioned to benefit from the recovery in air travel. Boeing also has a strong backlog of orders for its planes. Suppose Boeing can successfully fix the production flaws in the 737 Max and improve its margins in its defense unit. In that case, the company can deliver strong results in the coming years.
