Boeing warns 737 deliveries will be at low end of 2023 target

Boeing Co. warned investors that deliveries of its cash-cow 737 jetliner will come in at the low end of its targeted range this year, as a recently discovered supplier glitch crimps output.

Narrowbody handovers will be near the bottom of Boeing’s goal of shipping 400 to 450 of the popular 737 jets this year, Chief Financial Officer Brian West said at an investor conference on Thursday. Profit margins for the company’s commercial and defense units will be negative in the third quarter, he said.

The aviation titan disclosed last month that some holes in 737 bulkheads that help maintain cabin pressure were improperly drilled by supplier Spirit AeroSystems Holdings Inc. Boeing said then that the issue would cause some near-term delivery delays, and that it was evaluating the impact on the annual delivery target even as it works to lift output.

Addressing the Jefferies conference, West provided the first detailed look at how Boeing is grappling with another manufacturing defect potentially dating back years. The company is also contending with an earlier Spirit issue involving brackets used to attach the 737’s vertical fin to the main fuselage.

The US planemaker delivered just 22 of its narrowbody jetliners in August and expects to ship 70 of the jets during the third quarter, West said.

Even with the latest setback, Boeing remains on track to generate between $3 billion and $5 billion in free cash flow this year, West said. The manufacturer’s mid-decade targets for cash, 737 and 787 Dreamliner production haven’t changed either, West said.