Aerospace & Defense

Boeing Adds Systems to Build 737s Faster

Boeing 737-MAX-7-8-9 Artwork
Source: courtesy Boeing Co.
An automated system to build wing panels for 737 jets has begun operation at the Renton, Wash, plant where Boeing Co. (NYSE: BA) assembles about two-thirds of the current 42 737s the company builds each month. The system is a key part of the company’s plan to increase production of the 737.

Boeing has already announced an increase in 737 production to 47 a month in 2017 and is considering raising that to 52 a month in 2018 and perhaps as high as 60 eventually. Rival Airbus plans to increase production of its A320 family of planes from a current total of 42 a month to 50 by early 2017. Airbus also believes it can boost production to 60 planes a month if demand were there.

Since its first delivery in 1967, Boeing has taken orders for nearly 13,000 737s and delivered more than 8,400. The current backlog for all models in the family is close to 4,300. The Airbus A320 family rolled out its first delivery 20 years later and has captured nearly 7,600 orders and delivered nearly 3,900 aircraft.

The size of the backlogs that both companies claim is a worry to some analysts. Late last month analysts at Goldman Sachs put a Sell rating on Boeing’s stock, commenting on the risk of overbuilding in the narrow-body market. Boeing, and probably Airbus, also have to consider whether their suppliers can meet the higher levels of demand.

Analysts at Bank of America Merrill Lynch have also noted that the combined production increases the supply of seats by 7% while estimates of global traffic growth is expected to increase demand for seats by only 5%. Lower fuel costs could also cause some orders to be postponed or even cancelled for the two companies’ new fuel-efficient models.

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