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Boeing Lowers Production Rate


Boeing's Low Production Rate

The Boeing Company, the American multinational corporation that manufactures and sells airplanes, has recently announced that they anticipate a drop in the number of airplanes they deliver this year. This announcement was made by Boeing executives during the company’s quarterly earnings call. Following a record year in 2015 with 762 airplanes delivered, the Boeing Company expects to deliver around 740 to 745 airplanes in 2016.

This decrease in production is due to the company’s transition from the Boeing 737NG to the 737 Max at their production line in Renton, Washington. The decline in airplane production is also due in part to Boeing’s announcement that they would lower the production of the 747-8 to only six per year.

“This year you’ll see a bit of a transition because of the Max [and] a temporary reduction in revenue, top line if you will, as a result,” said Dennis Muilenburg, the CEO of the Boeing Company. “But we can tell you very clearly that our long-term view here is increasing top and bottom line performance and cash growth year-over-year.”

Muilenburg stated that the transition from the Boeing 737NG to the Boeing 737 Max will result in a drop of around 12 airplanes. This is due to the necessity for two Max test articles to be built, as well as the need for “build ahead” airplanes to be prepped for delivery in 2017.

“We indicated last year that we did not anticipate the production rate on the program going below seven per month,” Muilenburg said. “In solidifying our production plan over the last few months we can confirm that view.”

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