Boeing wins FAA approval to hike 737 MAX production to 42 planes per month

By David Shepardson and Dan Catchpole WASHINGTON/SEATTLE (Reuters) -Boeing won approval on Friday to raise its 737 MAX production to 42 planes per month, the Federal Aviation Administration said, easing a 38-plane cap in place since January last year and boosting its efforts to shore up its finances and move past concerns over safety and quality. The FAA imposed the unprecedented production cap shortly after a 2024 mid-air emergency involving a new Alaska Airlines 737 MAX 9 that was missing four key bolts in a door plug, causing a gaping hole to open in the fuselage at 16,000 feet (4,900 m). The incident revealed widespread production safety and quality lapses at Boeing. Increasing deliveries of the popular single-aisle airplane is critical to restoring Boeing's financial stability, following years of production disruptions and crises that have left it deep in debt and losing money. Planemakers receive the bulk of a customer's payment when they hand over an airplane.  The FAA said on Friday its safety inspectors "conducted extensive reviews of Boeing's production lines to ensure that this small production rate increase will be done safely." BOEING PLANS TO BEGIN BOOSTING PRODUCTION QUICKLY FAA Administrator Bryan Bedford called Boeing CEO Kelly Ortberg on Friday to confirm the planemaker could raise the production rate to 42 planes, a person briefed on the matter said. Boeing plans to quickly begin boosting production accordingly, the source added. Workers at the company's Seattle-area factories have been preparing to increase the 737 production rate by adding equipment for greater capacity, two other sources familiar with the matter said. Boeing said it appreciated "the work by our team, our suppliers and the FAA to ensure we are prepared to increase production with safety and quality at the forefront." Boeing shares were up 1.2% in after-hours trading. Boeing has produced 737s at higher rates in the past but the supply chain is more stressed now. Forgings, castings, engines and even interiors have all caused supply chain headaches for planemakers in recent years, aerospace analyst Glenn McDonald said. Supply chain problems seem to be more sporadic and unpredictable than before the COVID-19 pandemic, when they were more systemic, he said, noting that a factory fire in February left Boeing scrambling to find new sources for specialized fasteners. "Boeing seems to be better prepared for this ramp up than they have been for previous ones," he said. Under enhanced FAA oversight, the company has taken a cautious approach to stabilizing and then increasing production. Boeing has built up substantial inventories of parts and materials as a buffer against supply chain bottlenecks.  It had $11 billion in raw materials stockpiled, according to its second quarter earnings filings. That compares with $6.4 billion in inventory in 2018, when it was producing more than 50 of the 737 jets a month. Boeing also has $53 billion in debt now, compared with about $12 billion in 2018. Wall Street analysts expect Boeing to lose money again this year but project a profit in 2026, which would mark Boeing's first profitable year since 2018. Last month, the FAA partially restored Boeing's authority to issue airworthiness certificates for new 737 MAX and 787 airplanes.  That authority had been revoked for individual MAX planes in 2019, following fatal crashes in Indonesia and Ethiopia, and for wide-body 787 airplanes in 2022, due to production quality issues. In September, the FAA proposed a $3.1 million fine against Boeing for a series of safety violations, after it found hundreds of quality system violations at its 737 factory in Renton, Washington, and at the 737 fuselage factory of Boeing subcontractor Spirit AeroSystems in Wichita, Kansas, from September 2023 through February 2024. The Alaska Airlines incident in January 2024 prompted the U.S. Justice Department under then-President Joe Biden to open a criminal investigation. (Reporting by David Shepardson in Washington, Dan Catchpole in Seattle and Allison Lampert in Montreal; Editing by Rod Nickel and Edmund Klamann)

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