Boeing has achieved a significant milestone by winning regulatory approval from the Federal Aviation Administration (FAA) to ramp up production of its best-selling 737 Max jetliners to 42 units per month. This decision comes nearly two years after the FAA imposed restrictions on Boeing's production following a midair incident that raised safety concerns.
In January 2024, the FAA limited Boeing's output to a maximum of 38 aircraft monthly, despite the company producing at a lower rate at that time. This restriction was implemented after a door plug from a nearly new 737 Max 9 detached during an Alaska Airlines flight shortly after takeoff from Portland, Oregon. A report by the National Transportation Safety Board indicated that Boeing had failed to reinstall crucial bolts on the door plug before the aircraft left the factory. Fortunately, the 737 Max was able to return safely to the ground, but the incident forced Boeing back into crisis management just as company leaders anticipated a recovery year.
In a statement released on Friday, the FAA confirmed that it would continue to oversee Boeing's production processes. FAA safety inspectors have conducted thorough reviews of Boeing's production lines to ensure that this incremental increase in production rate is achieved safely. Boeing expressed gratitude for the collaborative efforts of its team, suppliers, and the FAA to ensure that safety and quality remain top priorities during this production ramp-up.
Boosting output is critical for Boeing's recovery after years of operational challenges. Airlines and other customers typically pay for the bulk of an aircraft upon delivery, making increased production essential for the company's financial turnaround. CEO Kelly Ortberg, who took the helm last year with a mission to stabilize the leading U.S. manufacturer, indicated last month that he anticipated receiving FAA approval to escalate production to 42 units soon, with further increases planned in the future. At a recent Morgan Stanley investor conference, Ortberg mentioned future production targets, stating, “We’ll go from 42 and then we’ll go up another five, and we’ll go up another five, aiming for a balanced inventory with the supply chain, likely around a production rate of 47 per month.”
This production increase reflects the FAA's evolving stance and growing confidence in Boeing after years of regulatory restrictions. Recently, the agency announced it would allow Boeing to resume signing off on certain aircraft before they are delivered to customers, a responsibility that had previously rested solely with the FAA.
The 737 Max program faced significant setbacks following two tragic crashes in 2018 and 2019, which resulted in the loss of all 346 lives on board. The aircraft was grounded for nearly two years, and the challenges didn't end there; the COVID-19 pandemic severely impacted production, compounded by ongoing supply chain issues and a labor strike at Boeing's primary factories in the Seattle area. As a result, Boeing has not reported an annual profit since 2018. However, the company's output has increased, and it is on track for new aircraft deliveries to reach their highest rate since 2018.
Boeing is set to release its quarterly financial results on October 29, with industry observers eager to see how the recent production changes will impact the company's bottom line.
This approval to ramp up 737 Max production is a hopeful step forward for Boeing, showcasing their resilience and commitment to safety and quality in aviation.
