Two years ago, Boeing was coming out of a strike, its commercial factories were producing zero airplanes, and the company had to restart from a standstill. Now it is building 38 jets a month and reaching for 47. However, the production ramp is not going as expected, according to CEO Kelly Ortberg during Boeing’s (BA) third-quarter earnings call on Oct. 27. Boeing’s 737 ramp hits speed bump Boeing’s final assembly line, where wings and fuselages come together into a finished 737, is running well. Also Read: New Boeing MAX 10 with special safety upgrade approved to fly travelers Ortberg said rework has dropped by 40% since the start of last year, suggesting improved operational efficiency. Ortberg also said at Morgan Stanley’s Laguna Conference on Sept. 16 that Boeing sustained its key metrics as it raised production. However, the trouble starts before the jets reach the final assembly. More Airlines: Another low-cost airline files for bankruptcy protection JetBlue, Southwest Airlines, and Allegiant make pricing move Southwest Airlines kills routes to multiple markets Boeing builds every wing for its 737 in Renton, but production is not running as expected. It is the primary reason why the airline manufacturer has not been able to scale up to 47 jets a month. To jump from 42 jets a month to 47, Boeing introduced fixes intended to speed up wing production, but they have not worked. Ortberg explained: “Some of those flow enablers just flat out did not yield the flow savings. Some did, some didn’t.” So Boeing is adding capacity and trying new fixes. Ortberg emphasized that the wings are the problem rather than the engines. Notably, things look different on the 787, where engine issues are affecting deliveries. What stands between Boeing and Rate 52 Boeing’s financial plan now targets 52 jets a month in the back half of 2027. Before Boeing can achieve this production target, it has to ensure: Wing production in Renton must hold steady at the current pace. The new north line in Everett must be certified and producing. Fuselages from Wichita must be stable at higher rates. The new north line in Everett is a key piece of the production puzzle. The line is brand new, so Boeing must first prove it can build jets safely and to standard. The company also plans to build four airplanes there to certify the line. Ortberg said that effort is going well, and the first 737 MAX 10 rolled out of Everett the day before the call. Related: New Boeing MAX 10 with special safety upgrade approved to fly travelers Ortberg said at the Sept. 16 Laguna Conference that Everett has an edge on the MAX 10. The jet is longer, and Boeing can’t line up MAX 10s nose to tail in Renton, but it can do so in Everett, which gives the company more flexibility with its product mix. Boeing is building fuselages slower than final assembly on purpose, to burn down inventory. Ortberg also said new safety and quality work there has slowed output a bit. “As I’ve said many times before, it’s more important that we do this ramp right than what particular month we achieve a rate break,” Ortberg said. CFO Jay Malave added that investors should expect longer gaps between future rate increases. How the delay shows up in the numbers Boeing’s third-quarter revenue was $24.2 billion, up 4%, while it reported an operating margin of 1.5%. It reported a per-share loss of $0.34, even as free cash flow was positive at $464 million. The commercial airplane unit delivered 161 airplanes in the quarter, including 124 737s and 22 787s. The segment reported a negative margin of 6.5%, a significant improvement year over year, compared with a 777X charge that impacted profitability last year. Malave said 737 deliveries will come in shy of the 500 target this year. The FAA certified the 737 MAX 7 in July and the MAX 10 last week. Boeing has already built some of those jets and expects about 30 of them to be delivered next year. It ended Q3 with a record total backlog of $745 billion. The cash flow plan is delayed At Morgan Stanley’s Laguna Conference, analyst Kristine Liwag told Malave that Wall Street expected Boeing to report a free cash flow of $6.2 billion in 2027. However, Boeing expects to report a free cash flow of $3 billion in 2027, $6 billion in 2028 and $10 billion in 2029. Malave explained why 2027 stays modest. Boeing paid about $700 million to the Department of Justice in a settlement this year, and that payment will not repeat. Malave called it a $700 million benefit to next year’s cash flow. That means most of the $1 billion step up from 2026 to 2027 comes from a one-time bill going away and not from core operations. Moreover, customer deposits will fall by a few billion dollars, and capital spending will rise to about $5 billion, up $1 billion. The plan also assumes the 777X is certified by the middle of 2027. The 787 offers a mixed picture. Production is stable at eight a month, and Boeing still plans to start moving to ten this year. Boeing CEO Kelly Ortberg says the company is wrestling with production issues Bloomberg / Getty Images My take: slow is the right call Promising a faster production rate is easy, but Boeing needs to deliver on these promises and regain investor confidence. I would watch four things: wing output in Renton, the Everett north line, Boeing’s 777X flight test approvals, and 787 engine deliveries. The risk is that so many pieces must land on time. A supplier problem has already disrupted the 777 freighter and 767 tanker lines, Malave said. Shipments have restarted, but the gap will take a few quarters to clear the factories. Malave said the extra cost will impact Boeing’s results over the next 12 months. Still, Ortberg said the range of outcomes is narrowing. If wings stabilize, Rate 52 should be the norm at Boeing. More Stocks News Down 82% from all-time highs, can PayPal stock finally recover in 2027? Analyst revamps SK Hynix stock price target after blockbuster earnings Oracle has a spending question its new chip deals can’t answer Celestica sees 2027 sales nearly doubling to $40 billion
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