Aerospace manufacturer Boeing reached its targeted build rate for its flagship 737 MAX aircraft in the latest quarter, positioning the company to seek the removal of a regulatory output cap on the narrowbody model.
Virginia-based Boeing in May increased 737 MAX production to 38 jets/month, the limit imposed by the US Federal Aviation Administration (FAA) following a midair panel blowout in January 2024 that brought increased oversight of the company's manufacturing processes.
That incident compelled Boeing to slow intake of shipsets from main supplier Spirit Aerosystems to focus on quality control, which weighed on output. A labor strike in the second half of 2024 further disrupted operations, as 737 MAX production hit zero before restarting in mid-December.
Boeing plans to demonstrate it can produce consistently at "rate 38" before asking for FAA approval to move 737 MAX build rates to 42/month later this year, the company said Tuesday in reporting second-quarter results.
Boeing also increased output of its main widebody model — the 787 Dreamliner — to 7/month in the quarter, up from the prior clip of 5/month. The company had contended with a supply shortage of heat exchangers and delays in seat certifications that prevented a step-change in build rates.
Higher output of the 737 MAX and, more importantly, the 787 Dreamliner bodes well for titanium supply chains that have faced diminished demand because of reduced production rates and ballooning inventories at original equipment manufacturers.
Titanium requirements for widebodies are roughly double those of narrowbody models in commercial aerospace, given their difference in size. The 787 Dreamliner contains around 15pc titanium by weight, while the 737 MAX's titanium usage sits around 6-7pc, based on industry estimates.
In another supportive sign for titanium suppliers, Boeing last week began production of the freighter variant of its newest widebody family — the 777X — that contains a higher percentage of the lightweight metal than the 787 Dreamliner. First delivery of the 777-8 freighter is anticipated for 2028.
Quarterly commercial aircraft deliveries surged by 63pc to 150 from the prior-year quarter, and were up by 15pc sequentially. The company's commercial backlog stood at more than 5,900 aircraft as of 30 June, after Boeing netted 455 orders during the quarter.
Boeing's quarterly loss narrowed to $612mn from $1.4bn a year earlier, while revenue climbed by 35pc to $22.7bn in the same timeframe.
Beating the ‘$500mn bogey'
Recent trade deals between the US and other countries that support a zero-for-zero tariff regime for commercial aerospace have given Boeing confidence that cost pressures related to higher duties this year will be less than the "$500mn bogey" that the company had estimated in April.
Washington's agreements with the UK, the EU and Japan have provided a "good boost" for Boeing in the quarter, but more work remains, the company cautioned. A deal has yet to be reached with Italy, which supplies Boeing with certain fuselage components.
Company executives also said they hope renegotiations of the US-Mexico-Canada (USMCA) free-trade agreement will not yield additional tariffs, give the amount of products Boeing imports from the US' neighbors.
