Boeing says it will build 500 737NGs annually, beginning in 2014, in a strong endorsement of the strength of its supply chain and airlines to withstand the threat of high fuel prices and economic uncertainty in Europe and the U.S.

The new rate, 42 per month, is the fourth boost in the past two years and will be absorbed by the second final assembly line at Boeing’s Renton facility, south of Seattle. The company’s 737 backlog is more than 2,100 aircraft.

Line One is already carrying its share of that rate at 21 per month, so the second line will absorb the increase from its current 10.5.

For several years, Boeing has been concerned that frustration over long lead times would drive its customers to other products unless it boosts production rates. That concern is not aimed just at AirbusBombardier in Canada, Comac in China and Irkut in Russia are developing 737 competitors.

Meanwhile, legacy airlines have learned to manage their way through economies that continue to remain weak so well that order rates for 737s remain strong.

The improvement package includes cabin upgrades of larger baggage bins and better lighting. The combination has helped sustain demand, says 737 General Manager and Boeing VP Beverly Wyse. Sixty-four customers have ordered the upgrades, she says.

Renton went to a 31.5-per-month rate in 2009, or not quite 1.5 airplanes per day, given an average 22 work days per month. The rate is expected to reach 35 per month early next year, 38 per month in the second quarter of 2013 and the 42 rate in the first half of 2014. The 31.5 rate is a record pace, so each increase sets a new standard for Boeing’s commercial production.

Overall, Boeing is boosting total airplane production 40% by 2013, the other big jump coming on its 777 widebody line.

Airbus previously announced a shift to 42 per month. Boeing officials say the Airbus figure was about the equivalent of 38 per month because the Europeans are factoring in that factories are closed in August.

Boeing does not build the 737 fuselage—Spirit AeroSystems does in a factory previously owned by Boeing in Wichita. The 42 rate has been under discussion for months. The big concern was not whether Boeing’s own workers and factories could keep up the pace, but whether the supply chain could do so. “We have worked very closely with our supply chain ... to ensure we can increase rate in an efficient and responsible fashion,” says Wyse. “We believe that many of the capital investments and production system changes made for 38 airplanes per month will already position us to build 42.”

The Renton facility dates to World War II but has been so thoroughly modernized over the past decade that it can support 737 production rates as high as 63 aircraft per month, Wyse says.