Boeing Company (BA)

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Boeing Slows Production of Its 787 Jet. Relax, It's Not a Quality Problem
By: Barron's | April 23, 2024

Boeing is set to slow production of its twin-aisle 787 Dreamliner jets. Shares are unaffected. Investors appear to be giving the company a pass since it isn't a quality problem — and because they hear from Boeing Wednesday morning when it reports first-quarter earnings.

The production slowdown is due to a parts shortage, according to Reuters, citing an internal memo. Boeing confirmed the memo's accuracy but declined to comment further citing its quiet period ahead of quarterly earnings.

Boeing produced about five 787 jets a month in 2023. The company also ended the year with about 50 built, but undelivered jets in its inventory, a consequence of a year-long delivery pause starting in 2021 to fix quality problems.

The current slowdown doesn't appear to be related to old issues. "We continue to manage through supplier shortages on a few key parts," reads part of the memo. "To that end, we have shared with our customers that we expect a slower increase in our rate of production and deliveries."

Supply-chain issues have been relatively common since COVID-19. Boeing peer Airbus cited supply chain challenges at its annual shareholder meeting on April 10.

Boeing stock hasn't been affected by the report yet. Shares were up 0.2% in premarket trading, at $170.85 a share, while S&P 500 and Dow Jones Industrial Average futures were up 0.1%.

Coming into Tuesday's trading, Boeing shares were down about 35% year to date. Most of that drop happened after an emergency door plug blew out of a 737 MAX 9 jet operated by Alaska Air on Jan. 5. The incident has led to slower MAX production, compensation paid to airline customers, and more Federal Aviation Administration oversight.

Boeing delivered 13 787 jets in the first quarter of 2024, up from nine in the first quarter of 2023. Boeing delivered a total of 63 787 jets in 2023.

Investors will get a chance to hear from management about the 787, 737, production, quality, and other topics when Boeing reports first-quarter results on Wednesday morning.

Wall Street is looking for a per-share loss of $1.63 from sales of $16.2 billion, according to FactSet. A year ago, Boeing reported a per-share loss of $1.27 from $17.9 billion in sales.

The company hosts a conference call at 10:30 a.m. Eastern time.

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