In the first quarter of the year, Boeing experienced a drop in airplane deliveries, with only 83 planes handed over in comparison to 157 in the previous quarter and 130 in the same period the year before. Most of these deliveries were 737s. Airbus, on the other hand, delivered 142 planes in the first three months of the year, with 63 being delivered in March alone. Boeing customers continue to place orders for new jets, with the company receiving orders for 111 planes in March, including 85 737 Max aircraft for American Airlines.
The decrease in deliveries for Boeing comes after a door plug blew out from one of its 737 Max 9 planes mid-flight in January. This incident brought the company close to a potential catastrophe, as it was found that the door plug was missing bolts that hold it in place. The Federal Aviation Administration has since inspected Boeing’s 737 Max production and has prohibited the company from increasing its output of the jets until it improves its quality control procedures. Boeing executives have stated that they are intentionally slowing down production to focus on quality control and prevent any issues that may arise from rushed production.
Boeing CFO Brian West emphasized that the company will not rush or go too fast in production, choosing instead to deliberately slow down to ensure quality. The decision has been made to constrain production rates on the 737 program below 38 per month until the company is confident it is ready to increase production speeds. The impact of this decision is expected to be felt over the next few months. The company’s decision to slow down production comes after backlash from some of its major airline customers, leading to CEO Dave Calhoun announcing his intention to step down by the end of the year.
Alaska Airlines, one of Boeing’s customers, received $160 million in compensation from Boeing in the first quarter due to a brief grounding of the planes after the mid-air incident. Boeing has also made changes to its leadership team, including replacing its board chair and head of its commercial airplane unit. The company is set to report its first-quarter results and provide an update to investors on April 24. Despite the challenges faced by Boeing in the first quarter, the company continues to receive orders for new planes and is taking steps to address quality control issues to ensure the safety and reliability of its aircraft.
