Boeing CFO says ‘don’t know exactly’ when 737 production rates will ramp

Boeing CFO Brian West, when asked how should investors think about a rate ramp while speaking at the Bank of America Global Industrials Conference, replied: “So with rates, I don’t know exactly what the rates are going to be for reasons I described. So I’m not going to guess. It’s not the right time. But I will say that our objective is to get quality up, get traveled work down and drive supplier stability. And some things that have happened recently that reinforce all 3 of those. I talked about quality and traveled work as it pertains to suppliers. We have recently updated our master schedule to reflect this slowdown that I’ve mentioned in the factory. But I will tell you that our objective is to keep with the practice that we had in the post-pandemic recovery, where we held the supply chain and pace them just ahead of final assembly. And we’re going to keep doing that. What it also means is that some suppliers, we are going to pace differently. And it will get tactical. The ones who were being get caught up, the ones who are ahead get to slow down. And we’re managing that supplier by supplier as we speak, in fact. We understand that when we do this, net-net, there will be spots where we are going to build inventory. And we’re doing that because we believe when the time comes and we want to increase our rates, we want to do it in a way that is stable. Very stable fashions are objective. So yes, it’s an investment, but we view it as an important investment as it’s going to be a cash headwind. It’s going to be an important investment when you consider the size of that backlog. We’re going to have to do it and face into it. So in terms of the timing, we’re going to take advantage of this moment. We are going to get the suppliers back where they need to be if they were behind. And we’re also going to incorporate these findings that we have from our own 737 factory team as well as the FAA. There’s lots of things that are coming in that we want to change the production system, and we’re going to do that. At the end of the day, I think on the 737, the way I think about it is the first half, the rates will be lower. Second half, they’re going to be higher as we get towards that 38 per month. And beyond 38 per month will be up to the FAA.”