Boeing Falls Far Behind Airbus On Deliveries Amidst 737 MAX Crisis

Boeing
BA
has published its deliveries for the first quarter of 2024, showing a sharp decline in commercial aircraft. The company has slowed production to address the Alaska Airlines
ALK
mid-exit door plug blowout.

The U.S. aerospace giant delivered 83 commercial planes to its customers, including 67 737s, three 767s, and 13 787 Dreamliners. These numbers reflect a significant slowdown compared to the first quarter of 2023, when Boeing delivered 130 airplanes, including 113 737s. It also represents a production rate well below the company’s current monthly limit of 38 737s.

Boeing’s European rival reported 142 aircraft deliveries for the first quarter, of which 128 were single-aisle planes, including the smaller A220 and the A320 family, which competes with Boeing’s 737. However, Airbus delivered fewer twin-aisle aircraft than Boeing, seven A330s and seven A350s, which compete with the Boeing Dreamliner.

Boeing CFO Sees Lower Deliveries In First Half Of 2024

At last month’s Bank of America Global Industrials Conference, Boeing’s Chief Financial Officer Brian West set expectations for lower production rates in the first two quarters, saying, “The first half, the rates will be lower; the second half, they’re going to be higher as we get towards that 38 per month. And beyond 38 per month, will be up for the FAA.”

The Federal Aviation Administration has stated it would only allow a ramp-up of Boeing production once the company has addressed quality and safety management issues. However, West said, “We’re deliberately going to slow [down] to get this right. We’re the ones who made the decision to constrain rates on the 737 program below 38 per month until we feel like we’re ready, and we’ll feel the impact of that over the next several months.”

Airlines Pressed For Planes As They Head for Summer

Airbus and Boeing’s customers face a shortage of planes while expecting high demand for summer flights. Some predict the impact on the airline industry could last for years.

For Airbus customers, including Delta Air Lines
DAL
, Hawaiian Airlines, JetBlue, and Spirit Airlines
SAVE
, the aircraft shortage is due to the necessary maintenance of Pratt & Whitney engines, which will keep planes grounded for inspection and maintenance.

Last week, the FAA issued a new Airworthiness Directive on this engine, warning that “affected parts are susceptible to failure significantly earlier than previously determined.” Complying with the inspections and work required by the AD could cost U.S. airlines over $150 million.

Boeing’s West addressed the aircraft shortage during the BoA Conference, saying, “We put the customers in a tight spot. The most important thing we do is communicate with them. And they have been supportive of everything we’re trying to do to enhance safety and quality for the industry.” West added, “At the same time, we have to understand what their needs are as they think about their flight schedules and their passengers.”

Boeing Has Sprung Back Before

While the production slowdown has impacted both Boeing and its customers, West also noted that the company had gone through previous dramatic fluctuations in production, including a complete stop on the 737 MAX.

“We ungrounded the entire MAX fleet. We went from producing zero 737s to getting to a rate of the low to mid-30s. We stopped production for a prolonged effort for well over a year on the 787. We stood up two shadow factories to deal with the rework for those airplanes on both the 737 and the 787,” West said, acknowledging that the company had more work to do. “We’re not going to be satisfied until we complete this journey.”