Boeing Abandons Guidance, Says 737 Max Production Will Take 2 Years to Reach Pre-Grounding Levels


Update (Feb. 12): One day after Boeing announced zero plane orders in January, the Chicago-based airplane manufacturer had more bad news: it would abandon forward guidance, along with the new understanding that 737 Max production line could take upwards of two years to get the volume back to pre-grounding levels.

CFO Greg Smith addressed shareholders at an investor conference on Wednesday, responding to questions about Max production and ungrounding timelines.

Smith said the underlying fundamentals of Boeing “haven’t changed much,” despite Max production being halted, and no clear visibility on when it can restart; nevertheless, there are no concrete details on when the plane can return to the skies.

He said the production rate could take upwards of two years to restore back to the pre-grounding level of 57, but there are a lot of moving variables in the supply chain, he added. It all depends on supplier inventory, he noted.

Smith said the groundings had dented global passenger growth of airlines by 1-1.5%.

He said there wouldn’t be any guidance given to investors as long as Max stays grounded, and production remains halted.

Smith said Boeing secured commitments of $12 billion in financing from more than a dozen banks last month, adding that the funds will be used to invest in production lines and pay down existing debt.

Shares of Boeing jumped in the early morning and have since faded into the afternoon.

* * *

Boeing shares slid half a percent on the news that the Chicago-based airplane manufacturer sold zero commercial planes in January.

January is typically a slow month for the planemaker, however, with the grounding of the 737 Max and production halted, this was the first time the company has seen no new orders in January since 1962!

The lack of plane orders last month allowed competitor Airbus to become the world’s largest planemaker, the first time since 2011. Airbus posted its largest January order haul in at least 15 years, as it booked gross orders for 296 aircraft, or 274 net orders after cancellations.

Last month, a 75% collapse in Non-Defense Aircraft New Orders was seen…its lowest level since 2009 as Boeing implodes.

None of which should be a surprise, as we noted previously, Boeing’s production cuts will slash Q1 GDP growth by a third.


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Articles by: Zero Hedge

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