Boeing (BA 2.35%) is reportedly planning a dramatic increase in 737 MAX production rates in 2022, a positive step that would lift free cash flow for both the aerospace giant and its sprawling supply chain.
Boeing had originally hoped to be making more than 50 737 MAX planes per month by now, but those plans were thrown into disarray by the grounding of the plane in March 2019 after a pair of fatal accidents. The grounding was lifted last fall, but Boeing has been slowly working through an inventory of planes built but not delivered during the downtime.
Image source: Boeing.
The pandemic added to the company's issues, suppressing demand for air travel and with it airline demand for new planes.
Boeing's current guidance calls for it to keep the MAX at an unspecified "low" rate of 31 airframes per month by early 2022. On Friday, Reuters reported that the company has drawn up plans to increase output to as many as 42 jets per month by fall 2022.
Boeing declined comment on the report. Jets have such a complicated supply chain that any change in production levels would have to be telegraphed to industry partners well in advance.
The company burned through nearly $20 billion in cash in 2020, and key suppliers including Spirit AeroSystems Holdings (SPR +0.00%) also suffered due to a lack of demand for new jets. An increase in production would ripple through the supply chain in a positive way, and would signal that Boeing believes airlines' demand for the 737 MAX will increase as global conditions normalize post-pandemic.
