Boeing will take months to increase jet production to the rates targeted before the union workers' strike that ended on November 5, leaving frustrated Gulf airlines awaiting deliveries of their delayed aircraft, analysts said.
The US plane-maker will build up its production rate slowly and gradually as workers return to their duties starting from November 6, with the 737 Max production output expected to reach the “the mid-teens” in the first quarter of next year, John Grant, senior analyst at travel data firm OAG, told The National.
This falls short of the goal of 38 planes a month before the strike, which had halted work on the 737 model. The US Federal Aviation Authority (FAA) had earlier frozen the monthly production rate of the 737 Max as Boeing works on a plan to improve its quality control and safety processes.
“They cannot get back to those numbers without full clearance from the FAA and that is going to take months, I anticipate they will get to the mid-teens by the end of the first quarter 2025 at best,” Mr Grant said.
US investment bank Jefferies expects that production could restart in the “upper teens” after the end of the strikes, compared to about 25 a month pre-strike rate, it said in a note on November 5.
Analysts expect Boeing to exceed its pre-strike production level on its best-selling 737 narrow-body model by 2027.
“Boeing can probably get back to its pre-strike production rates within a few months. This is because those pre-strike production rates were terrible. Getting to where they want to be, which is well over twice those pre-strike rates, will take longer than it would have before the strike,” Richard Aboulafia, managing director of US-based aerospace consultancy AeroDynamic Advisory, told The National.
“Maybe in late 2026 or 2027, they’ll get to [production] rate 40 on the 737.”
Boeing's US West Coast factory workers accepted a new contract offer on Tuesday, ending a seven-week strike that had halted production of its best-selling 737 Max jet, as well as the 767 and 777 wide-bodies. The strike that started September 13 hammered Boeing's finances and added to the US plane maker's mounting woes.
Gulf airlines have expressed frustration with Boeing's continuing aircraft delivery delays, which were worsened by the strikes, as the lack of new planes hampered their growth plans amid strong air travel demand.
Emirates in October said plans to hold a “serious conversation” with Boeing in the next two months after the troubled US plane maker again pushed back the delivery date for its 777X, delaying its largest wide-body aircraft by about six years. In a terse statement, Emirates president Sir Tim Clark said “I fail to see how Boeing can make any meaningful forecasts of delivery dates”, given certification issues on the 777X and the strikes that were still under way at the time.
Last month, flydubai chief executive Ghaith Al Ghaith said the industry needs more aircraft manufacturers to enter the market to stimulate competition and shake up the dominance of Boeing and Airbus. Delays in Boeing aircraft deliveries are affecting Flydubai's capacity to grow, forcing the airline to cancel the launch of routes planned for the second half of this year and to reduce flight frequency. The all-Boeing fleet operator said in July that it was informed by Boeing that it would not receive any more planes this year.
“Airlines have already been wrestling with the uncertainty caused by delivery delays and the inability to plan future schedule seasons with confidence,” London-based independent aviation consultant John Strickland told The National.
While it is a relief for Boeing to end the workers' dispute, increasing its jet production rates will require prioritising the quality of its and its relationships with employees and suppliers.
“Given the complexity of production processes and the complex web of sub-suppliers who have borne their own impact from the strike, this will not be an easy task,” Mr Strickland said.
“It will take months rather than days or weeks to ramp up production and even then there are still the regulator imposed limits on output as the company seeks to restore necessary quality and safety processes.”
While ending the strike is a positive step, Boeing still has a lot of work to do in the months and years ahead as chief executive Kelly Ortberg executes a wider plan to turn around the aerospace company.
The next step is to finish the acquisition of Spirit AeroSystems, the Wichita, Kansas-based supplier that produces the fuselage for its 737 Max jet and negotiate a contract with the 3,000-strong St Louis machinists, largely for defence production, George Ferguson, senior aerospace analyst at Bloomberg Intelligence, told The National.
“After this, it's all about improving quality and production throughput, reducing inventory and generating cash. Everything is largely in place, now its time to execute,” Mr Ferguson said.
Restarting and increasing production is necessary for the company to start generating cash and repaying debt, Ben Tsocanos, aerospace director at S&P Global Ratings, said in a report on November 5.
“We're watching to see how quickly aircraft production can recover and ramp up,” he said.
