Boeing aircraft deliveries are the highest in years. Now it is intensified

Boeing It is set to announce this week that it delivered the highest number of planes since 2018 last year after its production stabilized, the clearest sign of a turnaround yet after years of safety crises and mounting quality defects.

Now, the airline giant is planning to increase its production.

“It’s a long way back from a somewhat dysfunctional culture, but they’re making great progress,” said Richard Aboulafia, managing director of AeroDynamic Advisory, an aviation industry consulting firm.

Boeing has been forced to scale back production in recent years after two fatal crashes of its popular 737 MAX jet in 2018 and 2019 and a door seal on one of its planes exploding in mid-air in the first week of 2024. The Covid pandemic has disrupted aircraft assembly at both Boeing and its main rival Airbus, with supply chain delays and the loss of experienced workers, even after the worst of the health crisis has subsided.

Boeing leaders, including CEO Kelly Ortberg — a longtime aviation executive who came out of retirement to take the top job months after a mid-air door seal incident — are preparing to ramp up production this year of its cash cow 737 MAX and long-range 787 Dreamliner jets.

That could help the manufacturer, the largest U.S. exporter by value, return to profitability, analysts expect this year, an area that has been elusive for seven years as its leaders focused on damage control and were stuck reassuring frustrated airline executives who were waiting for delayed planes.

Their tune changed after Boeing became more predictable and increased production, with the FAA’s blessing. In a sign of the FAA’s increased confidence in Boeing, the agency said in September that Boeing could issue its own airworthiness certificates before customers get some of its 737 and 787 planes after years of restrictions.

Boeing’s commercial aircraft business is its largest unit, accounting for about 46% of sales in the first nine months of last year, with the remainder coming from its defense and services business. Boeing last announced its full-year earnings in 2018.

Investors are optimistic for further improvement. Boeing shares have risen 36% over the past 12 months, exceeding… Standard & Poor’s 500Progress is approximately 20%.

“Boeing is definitely better and more stable,” said Bob Jordan, CEO of Boeing’s aerospace subsidiary. Southwest AirlinesIn an interview on December 10.

The company is scheduled to outline production plans for 2026 later this month when it announces its quarterly results on January 27.

For Boeing, the recent shift has largely occurred on the assembly floor.

Under Ortberg, the manufacturer has reduced so-called mobile work, where assembly tasks are done out of order, to avoid costly mistakes. The company made other manufacturing changes as well, including additional training.

The National Transportation Safety Board said in June that inadequate training and management oversight were among the problems at the company, according to its investigation into what led to the January 2024 door plug explosion.

On December 8, Boeing also completed its acquisition of fuselage maker Spirit AeroSystems, which Boeing had spun off two decades earlier. It now has more direct control over the important resource.

Boeing delivered 537 aircraft in the first 11 months of last year. It announces December deliveries on Tuesday, but Jefferies estimates the company delivered 61 commercial jets last month, 44 of which were Boeing’s best-selling jet, the 737 MAX.

Boeing delivered 348 planes in 2024 and 528 in 2023. Last year’s total would still be far from the 806 planes it delivered in 2018.

Last October, the FAA raised the production limit for Boeing’s 737 MAX aircraft from 38 per month to 42. (The FAA requested its approval after the door seal incident.) CFO Jay Malavy said at a UBS conference on Dec. 2 that he expects the company to reach that rate in early 2026. Ortberg told investors in October that other price increases are on the table, with five-plane increments.

Deliveries to airlines in 2026 will likely be new production, compared to liquidation of old inventory, Malave said. He added that Boeing is also likely to produce about eight Dreamliners per month from early this year.

Deliveries are key for aircraft manufacturers, because airlines and other customers pay the bulk of the price of an aircraft when they receive it. Airbus, Boeing’s main competitor, is scheduled to announce orders and deliveries for 2025 on Monday.

However, several planes that were expected to actually carry passengers have not yet been certified, including the Boeing 777X as well as the Max 7 and Max 10 models, depriving Boeing of cash and driving up costs.

Southwest awaits the delayed Max 7, the smallest plane in the Max family. This model is important for airlines with low demand so that airlines can avoid oversupplying seats in the market, which leads to lower prices.

Southwest CEO Jordan said last month that he doesn’t expect the airline to fly the Max 7 before the first half of 2027 as Boeing’s certification work continues. Boeing at one point expected it to enter service in 2019.

“They’re still very short on delivering the planes we need, but I’m happy to see progress on the Max 7,” Jordan told CNBC.

Orders for both Boeing and Airbus planes look strong, with demand expected to continue to outpace supply in the next decade, Bernstein aviation analyst Douglas Harned said in a note last week.

Airbus surpassed Boeing in the number of deliveries last year, although Boeing appears to have outpaced its European rival in new orders.

During November, Boeing recorded a total of 1,000 orders compared to 797 from Airbus. Airline customers are beginning to look beyond this decade, stalling delivery times into the mid-2030s, as they plan international growth and expansions.

Wednesday, Alaska Airlines It said it had ordered 105 Boeing 737 MAX 10 aircraft, the longest aircraft in the MAX range. The order is a sign of “our confidence in Max 10 certification” as well as “our confidence in Boeing and its transformation and ability to produce high-quality aircraft on time,” Alaska Fleet President Shane Jones told CNBC.

Alaska also exercised options to purchase five 787 Dreamliners for more international routes just over a year after its acquisition of Hawaiian Airlines — a combination that gave Alaska more Dreamliners and Airbus A330s to reach destinations it couldn’t reach before, such as Japan, South Korea and Italy.

Ron Epstein, an aviation analyst at Bank of America, said the wide-body aircraft market is now gaining strength, with orders starting to be delivered faster to customers.

International travel, especially on high-end travel, has been particularly strong in the years following the pandemic as travelers vacationed around the world. More and more global airlines are looking to buy long-range aircraft such as Boeing Dreamliner and Airbus A330 and A350 aircraft for the coming years, boosting the wide-body aircraft market, analysts said.

Globally, planes flew at about 84% capacity in November, an all-time high, according to the latest data available from the International Air Transport Association, an aviation industry group.

As travel demand remains strong, requests to replace older aircraft and secure new aircraft will continue to fuel growth.

“The magic of air transportation, if you will, is that someone comes up with a carrier, you know, [like] “In Star Trek, where you kind of evaporate and emerge somewhere else, we’ll fly,” Epstein said.