Boeing Co (NYSE:BA) has kicked up its production tempo substantially, and that decision appears to be catching up to the Seattle-based industrial giant. The planemaker is navigating its way through several issues that are going to impact delivery schedules.
Bloomberg passes along details on the situation at hand for Boeing.
Boeing Co. is working through cascading supplier problems that will hamper third-quarter deliveries of its 737 jetliner, the planemaker’s largest source of profit.
Hiccups at the makers of fuselages and engines, combined with record 737 output, have contributed to a production logjam at the planemaker’s Seattle-area factory. Like Airbus SE, Boeing is starting to feel the consequences of its fastest-ever tempo for narrow-body aircraft as suppliers struggle to keep pace.
The company expects to deliver fewer 737s than anticipated in Q3 as a result of the various problems. Bank of America Merrill Lynch analyst Ron Epstein provided additional insight into the situation that Boeing is facing in a recent report.
“The problem may likely get worse for Boeing before it gets better,” he wrote. “That said, Boeing is building inventory until it receives engines and other components; however, once the parts arrive and deliveries are made, Boeing will have large cash inflows from airline customers and working capital.”
Boeing Co shares were trading at $343.72 per share on Thursday afternoon, down $2.35 (-0.68%). Year-to-date, BA has gained 17.71%, versus a 7.73% rise in the benchmark S&P 500 index during the same period.