Boeing postpones 2024 outlook as CEO says planemaker has 'much to prove' after Max 9 blowout

Separately, major Boeing customer Ryanair said earlier this week it was hopeful the 737 Max 10 plane would be certified before the end of the year and flying at the start of 2025

Wed, 31 Jan, 2024 - 17:10

Boeing has "much to prove" to regain the confidence of regulators and customers after a mid-air cabin-panel blowout of a 737 Max aircraft, chief executive Dave Calhoun has said, adding that the planemaker will "go slow" as it faces a "serious challenge".

As expected, Mr Calhoun did not offer a financial or delivery forecast for 2024, stating that the company must focus on delivering quality airplanes.

"We will not rush the system and we will take our time to do it right," Mr Calhoun said in a letter to employees, while voicing confidence in Boeing's recovery from the current crisis.

The accident involving an Alaska Airlines-operated Max 9 jet in early January has turned into a full-blown safety and reputational crisis for the planemaker, potentially leading to slower jet production and a loss of more narrow body market share to Airbus.

Boeing said that 737 aircraft were being produced at a previously outlined rate of 38 a month, a level that it plans to maintain after the US Federal Aviation Administration (FAA) barred the company from lifting production, while increasing its oversight.

Increasing production of 737 Max jets is crucial to Boeing's recovery from a separate safety crisis arising from two fatal crashes in 2018 and 2019 and the subsequent aerospace slump that followed due to the onset of the covid pandemic.

"We've taken significant steps over the last several years to strengthen our safety and quality processes, but this [Alaska Air] accident makes it absolutely clear that we have more work to do," Mr Calhoun said, amid mounting pressure on the company's top brass.

He also pointed to an announcement by Boeing earlier this month that it would add further quality inspections for the 737 Max and deploy a team to supplier Spirit AeroSystems, which makes and installs the plug door involved in the incident.

In its earnings release, Boeing did not provide an update to its 2025-2026 cash flow and Max production forecast amid lingering industry doubts on whether the planemaker will be able to achieve those targets after the FAA's unprecedented decision.

During its investor day in November 2022, Boeing projected free cash flow of about $10bn by 2025 to 2026 and 737 production of 50 per month.

The planemaker, long a symbol of America's manufacturing prowess, has yet to consistently report positive cash flows as it faced difficulties in raising production in the last two years due to a fractured supply chain and nagging quality issues.

The FAA has barred Boeing from expanding the production of the best-selling 737 Max aircraft.

The regulator launched a formal investigation into the 737 Max 9, grounding the planes for safety checks and tightening oversight of Boeing itself.

The single-aisle 737 Max, launched in 2011, is Boeing's cash cow and investors keep a close watch on its production and deliveries.

Boeing handed over 387 Max aircraft in 2023 and had unfulfilled orders for 4,783 Max jets, according to its website.

The Max, which is powered by Leap engines made by a joint venture between GE Aerospace and Safran, comes in four variants.

Separately, major Boeing customer Ryanair said earlier this week it was hopeful the 737 Max 10 would be certified before the end of the year and flying at the start of 2025.

"We'd be hopeful that the Max 10 will be certified somewhere towards the back end of 2024," Ryanair chief financial officer Neil Sorahan said.

"You might not see the first aircraft flying in 24, maybe in the first quarter of 25," he said.

Ryanair has firm orders for 150 Max 10 aircraft and options for 150 more.