Boeing Cuts 737 Delivery Guidance Just One Month After Boosting It Due To Improperly Drilled Holes

Just one month after Boeing reported stellar Q2 earnings, including cash flow that blew away Wall Street estimates and guided to higher output of Boeing 737, to wit:

“Boeing said it is starting to raise output of its 737 jetliners to a 38-jet monthly rate, which according to Bloomberg is a 23% jump from the previous manufacturing pace… The company also said it plans to reach a level of 50 737s per month in the 2025/2026 timeframe, and still expects to deliver 400-450 airplanes this year.”

… this morning the US aerospace giant decided that the future wasn’t all that bright after all, and after enjoying the brief boost in stock price, and this morning Boeing warned that deliveries of its cash-cow 737 jetliner will come in at the low end of its targeted range this year, as a recently discovered supplier glitch crimps output (it’s amazing how these glitches are always discovered right after the company boosts guidance during quarter-end earnings).

And yes, we certainly find it amazing how there is always something wrong with the plane that  was “designed by clowns, who are in turn supervised by monkeys.”

Speaking at a Jefferies investor conference on Thursday, CFO Brian West said that narrowbody handovers will be near the bottom of Boeing’s goal of shipping 400 to 450 of the popular 737 jets this year, Chief Financial Brian West said at an investor conference on Thursday. Profit margins for the company’s commercial and defense units will be negative in the third quarter, he said.

The aviation titan disclosed last month that some holes in 737 bulkheads that help maintain cabin pressure were improperly drilled by supplier Spirit AeroSystems. Boeing said then that the issue would cause some near-term delivery delays, and that it was evaluating the impact on the annual delivery target even as it works to lift output.

West provided the first detailed look at how Boeing is grappling with another manufacturing defect potentially dating back years. The company is also contending with an earlier Spirit issue involving brackets used to attach the 737’s vertical fin to the main fuselage.

The US planemaker delivered only 22 of its narrowbody jetliners in August – a far cry from the 38 its guided to just a few weeks earlier – and expects to to ship 70 of the jets during the third quarter, West said, making a mockery of its own guidance.

Even with the latest setback, Boeing remains on track to generate between $3 billion and $5 billion in free cash flow this year, West said. The manufacturer’s mid-decade targets for cash, 737 and 787 Dreamliner production haven’t changed either, West said.

BA stock, which has been drifting lower ever since its blowout – and now fake – Q2 guidance at the end of July, dropped to session lows, before rebounding modestly and trading 1% lower.