Story ID: GPboeingsupply10242028
Boeing Upbeat on 737 Supply Chain Recovery
By: Gregory Polek
Caption: CEO Muilenburg sees engine supply returning to normal by year-end
Word Count: 392
Boeing continues to see “positive signs” emanating from its 737 supply chain, following an encouraging month of September in which it delivered 61 of the narrowbodies. Speaking Wednesday during the company’s third-quarter earnings call with investment analysts, Boeing CEO Dennis Muilenburg sounded upbeat on the performance of the 737’s suppliers in recovering from a miserable summer, as scores of airframes collected outside its plant in Renton, Washington, awaiting completion. Planning to continue to exceed its benchmark delivery rate of 52 per month in the fourth quarter, Boeing still expects to meet its guidance for the year as it prepares to increase its rate to 57 per month in 2019.

Muilenburg specifically noted a recovery in fuselage section deliveries from Spirit Aerospace, while reporting significant progress in terms of CFM Leap-1B engine supply.

“We now have fuselages being delivered to purchase order plans and we’re also seeing engine recovery,” said Muilenburg. “And while we still have some work to do there, we’re anticipating engine recovery towards the end of the year. You can see that reflected in deliveries as well; the strong September deliveries give us building confidence in the recovery, and we have not changed our year-end guidance for deliveries.”

For next year, Muilenburg referenced applying “lessons learned” from the last rate hike to 52 per month, including earlier staffing increases and more in-depth monitoring of supply chain health. He also noted differences in the circumstances surrounding the next planned hike compared with those that negatively affected the last increase.

“As we stepped to 52 a month, we also had major model mix changes,” explained Muilenburg. “Roughly half of the airplanes this year are NGs and half are Maxes. As we get to next year and towards the 57-a-month rate break, we’ll be almost entirely Maxes by that point. So the model mix challenge will not be as difficult.”

Though not every airplane emerging from the factory is necessarily ready for delivery, Muilenburg reported seeing “more and more” airplanes rolling out complete and fewer AOGs on the ramp. “If I look at every element of the recovery...across that entire set of metrics they’re all trending in the right direction,” he said. “We’re going to stay very, very focused on it...and get the production line back to full health.”