Boeing 737 MAX Deliveries Remain Sluggish
Boeing delivered just 20 737 MAXs in February, continuing a trend that has the manufacturer struggling to shrink its inventory of narrowbody aircraft on hand—many of them accumulated during the model’s 21-month grounding that ended in December 2020.
The monthly 737 MAX delivery total was lower than January’s 27, and below Boeing’s approximate production rate of 26 airframes per month. Aviation Week Fleet Discovery figures show 11 deliveries came from Boeing’s stored inventory accumulated before December 2020. Another was manufactured in March 2021, not long after the delivery restart.
“Some of the aircraft have longer-dated delivery dates based around airline needs,” Jefferies analysts wrote in a March 8 research note based in part on a meeting with Boeing executives. “There have been some delays around COVID and disruptions around hiring, but the FAA has not been a limiting factor. Boeing continues to feel good about the demand situation.”
The FAA is issuing airworthiness certificates on each 737 MAX—part of the delivery restart conditions put in place following the model’s grounding and related delivery pause. Boeing accumulated about 460 737 MAXs during the delivery hiatus. Fleet Discovery data show it still has about 270 of them on hand.
With production on track to reach 31 aircraft per month soon, Boeing must ramp up 737 MAX deliveries significantly to keep its inventory winding down and newly built aircraft flowing to customers. Company executives suggested on a late January earnings call that a target of 500 737 MAX delivers in 2022 was realistic. Boeing has handed over 47 through two months, meaning it must average about 45 deliveries/month for the remainder of the year to approach its notional target.
The Seattle Times reported that supply-chain issues are to blame for the latest headwinds affecting the 737 MAX delivery pace. Any new issues obtaining parts or materials for new-build aircraft should not carry over to the 300-plus aircraft that have been on hand for months, however—including more than 200 completed in 2019.
Boeing’s February MAX-family deliveries were joined by two other customer handovers—one 777F to DHL, and one 747-8F to UPS. Boeing’s 747 backlog is down to five airframes—four for Atlas Air and one for UPS.
The company booked 37 new orders in February, including 12 737 MAXs and two 737 MAX business jet variants purchased by unannounced customers. Boeing also booked five orders from unnamed customers for current-version 777Fs.
Boeing’s February transactions also include 18 737 MAX orders and four 787 cancellations from Air Lease Corp. The lessor said in a regulatory filing that it converted three 787s orders to the 18 737 orders. Aviation Capital Group also canceled one 737 MAX in February.
The company also moved 52 orders—48 737 MAXs and four 787s—from its ASC 606 accounting category and shifted three 737 MAX orders into it. The changes added a net total of 49 orders to Boeing’s official backlog, which stood at 4,375 on Feb. 28, not including 814 in ASC 606, which signifies firm orders on shaky ground.
Boeing’s undelivered backlog includes 34 orders for airlines with ties to Russia—28 737 MAXs for UTair Aviation and six 777Fs for Volga-Dnepr UK. Also in its backlog are four 737 MAXs destined for Belarus-based carrier Belavia via lessors. Barring a significant change in the direction of Russia’s invasion of Ukraine, with cooperation from Belarus, and the related business ramifications—including Boeing’s decision to end all support for Russian customers—none will be filled.
As expected, 787 deliveries remain on hold. Boeing and the FAA continue to hash out parameters for inspections and rework required for some 110 aircraft in Boeing’s inventory and the few new airframes rolling off the production line. Boeing is producing 1-2 787s per month while it focuses on addressing the production-quality issues.
A customer has not flown off with a new 787 since mid-2021, and issuance of airworthiness certificates—which the FAA assumed for a few airframes as part of stepped-up oversight on the program and plans to conduct once deliveries resume—stopped even earlier.
Developing a process to determine just how much work is needed, the type of work required and on which aircraft has proven challenging. Most of the lingering issues are related to tiny gaps between fuselage sections and around doors that must be identified, quantified and, if necessary, repaired before delivery.
Spirit AeroSystems says issues affecting the parts it provides—including the 787 nose section, or Section 41—have been identified, and its employees have corrected issues on about 40% of the stored inventory.
“We’ve been through all the engineering analysis, and we’ve completed that, and we know now what changes we need to make to production going forward,” Spirit CEO Tom Gentile said on the company’s 2021 fourth-quarter (Q4) earnings call Feb. 2. “In terms of the rework, again, we’ve also identified the rework that needs to be done, and we will complete that rework as we get access to those aircraft.”
Neither Boeing nor the FAA will discuss when 787 deliveries might resume. Weeks ago, an early second-quarter time frame seemed in play.
During American Airlines’ Q4 earnings call on Jan. 20, CFO Derek Kerr said the airline is slated to take its next 787 delivery in mid-April—adding that the date had been “locked in for several months.” The delivery was one of 13 that American said it expected to add in 2022, including four in time for the peak summer season.
During Boeing’s Q4 earnings call Jan. 26, CEO Dave Calhoun declined to comment on a specific delivery resumption date, but he suggested that Kerr’s outlook was accurate.
Three weeks later, on Feb. 18, American revealed in an internal memo made public in a regulatory filing that it now expects just 10 787 deliveries in 2022 and four in 2023. American revised its summer schedule, “reducing our flying versus our prior plans due to Boeing’s continued inability to deliver our 787-8 aircraft,” the memo said. American’s new schedule suspends service on three existing intercontinental routes, cuts frequencies on a fourth and delays the launch of a new one.
“We still have tremendous confidence in the aircraft and will continue to work with Boeing on their delivery,” the memo says. “In addition, as previously stated, Boeing has advised us that they will compensate us for their inability to deliver the aircraft.”
American’s memo did not provide any details on an updated 787 delivery schedule.