Boeing’s Chief Financial Officer, Brian West, has disclosed that a manufacturing defect discovered last month in the Boeing 737 MAX is expected to have a significant impact on the company’s operations.
This defect is likely to reduce the delivery rate of the MAX by approximately one-third, resulting in negative cash flow and a financial loss for the third quarter, according to Seattle Times.
The defect, which affects three-quarters of the 220 parked MAXs in inventory, involves improperly drilled holes in the aft pressure bulkhead, a crucial component of the aircraft responsible for maintaining cabin pressure. While the defect doesn’t pose an immediate safety-of-flight concern, it must be repaired before planes can be delivered, and some already in service will require fixes during scheduled maintenance.
Boeing has been grappling with a series of quality defects over the past three years, disrupting production and deliveries of its major airplane programs, including the 737 MAX and the 787 Dreamliner.
West explained that the repair process for the aft pressure bulkhead defect is more complex and time-consuming than previous issues, involving hundreds of inspected holes and X-ray inspection steps. Despite the challenges, Boeing is confident it can resolve the problem.
For the third quarter, Boeing expects to deliver only 70 MAXs, compared to 111 in the first quarter and 100 in the second quarter. However, West anticipates that MAX deliveries will increase in the fourth quarter, reaching the previously projected goal for the year of 400 to 450 jets, albeit at the lower end of that range.
Boeing’s 787 Dreamliner program has also faced manufacturing quality defects, particularly related to gaps in the aircraft structure. West noted that repair work is progressing as expected.
Additionally, Boeing’s defense and space division is still grappling with financial challenges, largely due to fixed-price development programs and supply-chain issues. Despite these short-term difficulties, Boeing maintains a positive long-term financial outlook, with strong demand for aircraft.
Boeing’s share price saw a decline following West’s remarks, falling below $217 from a previous level of $222.57. However, Boeing remains focused on achieving stability and predictability in its operations to meet its long-term financial projections, including positive free cash flow in the years ahead.