Boeing 737 output falls sharply as FAA increases checks, sources say

Boeing 737 MAX jetliner production has fallen sharply in recent weeks as U.S. regulators step up factory checks and workers slow the assembly line outside Seattle to complete outstanding work, industry sources told Reuters.

The FAA has imposed a cap of 38 jets a month following a blowout on a 737 MAX in January, blamed on an assembly error. But the monthly output rate is fluctuating well below this level and in late March fell as low as single digits, they said.

Boeing referred to comments by CFO Brian West who said last month it was taking comprehensive steps to strengthen quality and build confidence - including reducing the amount of so-called travelled or pending work - as the FAA increases audits.

West told a Bank of America event that the U.S. Federal Aviation Administration was "deeply involved and undertaking a tougher audit than anything we've ever been through before."

Boeing also says it has made efforts to reduce the amount of so-called "travelled work" - or planes moving down the line with jobs still needing to be fixed from earlier work stations. The effect is to slow overall production and, in turn, deliveries.

Planemakers get paid for their jets upon delivery, but the underlying production rate dictates the pulse of an industrial system feeding thousands of aerospace suppliers worldwide.

Boeing's production slowdown is also expected to ripple through the airline industry, with carriers shaving flights from their schedule or extending existing jet leases to meet demand.

Traditionally production and deliveries went hand in
hand, but the grounding of the MAX in 2019 and 2020 and
disruption from the pandemic created a stockpile of surplus jets
that mean it is harder now to glean the production rate from
deliveries.

To try to understand how fast Boeing's main cash cow is
being built, independent experts study the number of first test
flights being carried out for individual new jets each month.

Rob Morris, global head of consultancy at Cirium Ascend,
said Boeing flew 13 MAXs in March, following 11 in February. The
rate peaked around 38 a month in mid-2023, Cirium data shows.

Airbus, by contrast, flew an average of 46 a month of
its competing A320neos in the first quarter, Morris said.

Boeing's European rival has its own supply constraints
and is producing around 50 A320neo-family jets a month, below
the 58 originally targeted early this year, industry sources
have said.

It also faces ongoing shortages of maintenance capacity
for some engines, leaving jets idle for months once in service.

But with Boeing having to slow production sharply in
order to satisfy FAA inspectors that its industrial operations
are working smoothly, Airbus has extended a comfortable lead in
the market for the most-sold category of single-aisle jets.