Boeing plans to increase new aircraft production & deliveries, supporting higher cash in 2023

According to a statement released by Boeing on Wednesday, November 2, it plans to increase new aircraft production and deliveries, supporting its estimate for higher cash in 2023.

Boeing estimated that it will create between $3 billion and $5 billion in free cash flow in the coming year, which is higher than the $1.5 billion to $2 billion it anticipated to generate this year but less than the $6.53 billion experts surveyed by FactSet expected.

Deliveries are crucial for aircraft manufacturers because deliveries are when airlines or other customers pay the majority of the transaction. Boeing and Airbus stated last week that issues with the supply chain and a manpower shortage have hampered the production and deliveries of new aircraft. Airlines have complained that a lack of aeroplanes is making it difficult for them to add new flights.

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Boeing anticipates producing 10 787 per month

According to Chief Financial Officer Brian West, Boeing anticipated increased free cash flow as it anticipates ramping up deliveries of the 737 MAX and 787 aircraft.

West said that the American aerospace company plans to deliver 400–450 MAX aircraft next year, up from the 375 single-aisle aircraft it anticipates delivering this year. Similarly, it anticipates delivering 70–80 787 aircraft in 2023.

The pandemic and the grounding of the 737 Max, the company’s best-selling aircraft, following tragic crashes, are problems that Boeing is attempting to overcome at the same time. To assist pay off its debt, it wants to strengthen its free cash flow.

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Boeing anticipates producing 50 737 MAX per month

It anticipates producing 50 MAX aircraft and 10 787 aircraft per month, which will allow it to deliver 800 commercial aeroplanes at the very least by 2025. Currently, 31 MAX aircraft are produced per month; however, the production pace for the 787 is intended to progressively rise to five per month.

Due to manufacturing delays, reductions in the expectation for aircraft delivery, and rising losses at its military division, investors have become dubious of Boeing’s ambitions. Some analysts questioned the company’s production and delivery plans citing supply-chain problems.

However, Chief Executive David Calhoun asserted that the company has considered all of the potential difficulties.

“We believe the plan that we have out here, the guidance that we’ve provided is doable. If we didn’t, we wouldn’t put it up.”

– Chief Executive David Calhoun stated.

Despite Boeing’s “poor” record for missing its goals, Colin Scarola, an analyst at CFRA, said the outlook announced on Wednesday is “pretty conservative” and “achievable.”Operationally, I am feeling much better about Boeing than I did last week,” Scarola said.

Customers of Boeing have found it more difficult to ramp up capacity to take advantage of the increasing travel demand due to regulatory and production delays. According to current regulations, the Federal Aviation Administration (FAA) has until the end of December to certify the company’s MAX 7 and MAX 10 aircraft.

“The playbook for us is very straightforward – deliver aeroplanes, generate cash, pay down debt”

-Chief Financial Officer Brian West said

The MAX 7 is anticipated to receive certification later this year or in early 2023, while the MAX 10 is anticipated to receive certification in late 2023 or early 2024.

Boeing shares added 2.8% Wednesday after it released its forecast for the coming years at an event for analysts and investors at its Seattle-area facilities — the first of its kind since 2016, a spokeswoman said.