Boeing has set its sights on ramping up production of the 737 Max aircraft, but don't expect significant changes until later in 2027. The company is grappling with slower-than-expected wing production, which has thrown a wrench in its timeline. During the quarterly earnings call, CEO Kelly Ortberg laid out Boeing's plan to hit a production rate of 52 planes per month by the end of 2027. Currently, they are producing about 47 planes each month.
The news sent Boeing's stock tumbling, dropping roughly 9% during the call. Ortberg was candid about the challenges, stressing the need to stabilize production. "I know everybody wants us to go faster but we're going to do it right, " he told CNBC. The focus remains on refining lean operations, boosting productivity, and ensuring that safety and quality aren't compromised.
Boeing's ability to produce and deliver aircraft plays a critical role in its financial health, given that a significant portion of an aircraft's price tag is settled upon delivery. For the third quarter, Boeing reported a narrowed net loss of $116 million, or 26 cents per share. This is a marked improvement from the previous year's $5.34 billion loss, or $7.14 per share. When adjusted for one-time items, the loss was 34 cents per share.
Revenue saw a 4% bump, climbing to $24.19 billion, while free cash flow surged to $464 million from $238 million in the same quarter last year. The defense division was a standout performer, with revenue jumping 15% to $7.94 billion, adding a solid boost to Boeing's financials.
Commercial Aircraft Challenges
Boeing delivered 161 commercial airplanes in the third quarter, a slight increase from the previous year. Despite this, the commercial aircraft division saw a 3% drop in revenue, down to $10.72 billion. The unit faced a tough operating margin of negative 6.5%, a result of an unfavorable delivery mix, projected higher costs for future production changes, and rising supply chain expenses.
Ortberg acknowledged in a memo to employees that the company still has "more work to do." Nevertheless, Boeing has scored some recent wins. The U. S. Navy has chosen Boeing to develop its next-gen fighter jet, and the Federal Aviation Administration recently greenlit the 737 Max 10, the largest in the Max series. This approval follows the certification of the 737 Max 7 in August, wrapping up the certification process for the Max family.
As Boeing gears up to update investors on its aircraft production outlook, the focus is on tackling production hurdles and boosting operational efficiency. The investor briefing, slated for Tuesday before the market opens, will shed more light on Boeing's strategies and future expectations.
