Boeing responds to backlog, likely to boost 737 production rate this fall


Expect Boeing to boost production of the 737 jetliner even more this fall.

Comments from Chief Financial Officer Greg Smith Thursday morning indicate Boeing is planning to ramp up production of the popular plane. Smith, who was presenting at the Jefferies 2014 Industrials Conference in New York, said in his remarks that “very strong demand” is leading to further aircraft rate increases, after 17 increases so far.

“On the 737 we’re seeing more pressure to go up in production rates,” he said. “And we’ll be addressing that in next couple of months to come.”

This suggests an even-higher rate boost than the 47 planes-per-month now planned for 2017.

The backlog of 737s is at a record level of 3,952 aircraft, or nearly eight years of work at the current rate. Boeing CEO Ray Conner has indicated he would like to reduce the backlog, partly because a waiting time that long can discourage additional orders.

So far this year customers have ordered 550 model 737s, more than Boeing can produce in a full year of production at the current rate of 42 monthly.

The 737 is the mainstay of Dallas-based Southwest Airlines’ (NYSE: LUV) fleet and is an important part of the fleet of Fort Worth-based American Airlines Group (Nasdaq: AAL)

An even-higher 737 production rate is good news for the Puget Sound Region because it will strengthen the case for more hiring at Boeing, and at its suppliers. While the 737 fuselages are made in Wichita, Kansas, Boeing builds the wings in Renton, and many of the parts for this assembly, and other parts of final assembly, come from suppliers in the region.


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