Boeing's recent performance in the aerospace sector has illustrated a notable downturn, as the company's deliveries and orders saw a decline month over month in August. The esteemed aircraft manufacturer reported the delivery of 40 jets, which included 32 units of the 737 Max. While this marks a decrease from 43 deliveries in July, it does indicate an improvement compared to the 35 jets delivered in the same month last year, based on the information disclosed on its official website. In terms of new orders, Boeing secured 22 in August, a significant drop from the 72 orders received the month prior and 45 orders from the same time last year.
This decline has inevitably impacted Boeing's share price, which witnessed a reduction of 2.3% during late-afternoon trading on Tuesday. Industry insights reveal that Boeing's latest timeline for the 737 indicates an expected production rate of 42 units per month starting in March 2025. This is a reassessment from a previous target scheduled for September of this year, as reported by Reuters, which cited three informed sources from within the industry.
Despite the anticipated ramp-up in production, the Federal Aviation Administration (FAA) production limit of 38 jets per month remains intact indefinitely. As the aerospace community, including investors, anxiously awaits clearance from the FAA for an increase in production rates, concerns have been expressed regarding the potential strain on the supply chain.
Truist Securities addressed this issue in a Tuesday note to clients, predicting that delays in raising production rates and prevailing uncertainty may further exacerbate inventory build-ups. From the beginning of the year through August, Boeing has made 258 deliveries and secured a total of 250 new orders.
By the end of August, the company was faced with a substantial backlog, with 6,165 unfilled orders still pending, as indicated by their data. In a noteworthy development on Sunday, Boeing announced a tentative labor agreement with the International Association of Machinists and Aerospace Workers (IAMAW), which represents over 33,000 of the company's workforce.
The proposed four-year contract entails a substantial wage increase of 25% over its duration. Additionally, the aerospace giant has undergone a significant leadership change, as industry veteran Robert Ortberg was appointed as the new chief executive last month. He succeeded Dave Calhoun, who had previously indicated his intention to retire by the end of 2024. In a strategic move to enhance its position in the market, on July 1, Boeing disclosed plans to acquire Spirit AeroSystems in a striking deal valued at approximately $8.3 billion.
This acquisition seeks to reverse the separation that occurred back in 2005, integrating the two entities further in their operational synergies..