Well, it's official. Less than two months after Boeing (NYSE: BA) first floated the idea of accelerating production of its uber-successful 737 airliner, the company confirmed this week that the rate increase will indeed happen. For all the talk of how Airbus's "A320neo" is stealing sales, how Bombardier's CSeries will soon enter the market, and how China and Russia are "on its six," the truth is that Boeing's doing just fine.
According to Boeing, it's sold 8,888 units of the 737 so far. The company has so many orders stacked up already that it'll take till 2016 to work through the backlog at its current production rate. So Boeing's going to gradually ramp production a bit at a time. By early 2014, Boeing will be building 737s at the rate of 42 planes per month -- two complete aircraft every day of the workweek, and then some. The market's just that good.
Boeing Commercial Airplanes boss Jim Albaugh describes sales of the Next-Generation 737 coming in "at an unprecedented rate." And if you think the man's just "talking his book," take a look at how often this strength in sales has forced the company to reevaluate its need to build more planes, faster, over just the past year:
When you consider how fast that picture is changing for the better, and remember what happened to Boeing the last time it found itself with a hot-selling product on its hands, I guess it's understandable why Boeing has taken its time before making this announcement official. Leery of running into the supply chain problems that afflicted the 787, Boeing likely wanted to make sure that key suppliers Spirit Aerosystems (NYSE: SPR), Honeywell (NYSE: HON), United Technologies (NYSE: UTX), and General Electric (NYSE: GE) could handle the surge in demand. Based on this week's announcement, it seems the suppliers are on board.
Foolish takeaway
For Boeing, the question's no longer "if we build it, will they come?" The customers are already here, queued up on the sidewalk, banging on the door, and demanding their 737s. Time to get to building.
