Following the release of third-quarter results that easily missed earnings expectations among a decline in revenue, Boeing surprisingly announced that it plans to increase the production of the 737 MAX. While no United States airline is expecting to see the Boeing 737 MAX back in the skies this year, Boeing is still saying that it expects to see regulatory approval in the fourth quarter of 2019.
Yesterday Simple Flying wrote about the Boeing investor dividend of $2.05 per share and the fact, analysts were expecting a cut in production of the 737 MAX due to the on-going crisis.
With the 737 MAX grounded, investors in the aerospace giant can be forgiven in thinking that Boeing would cut back on the production of the MAX and concentrate on filling other aircraft orders.
Boeing wants to build 57 737 MAXs per month
CNBC, however, is reporting that not only did the Seattle planemaker continue to build 42, 737 MAXs per month it now intends to “gradually increase” production to 57 a month by the end of next year.
The results published on Boeing’s corporate website show third-quarter revenue at $20 billion a decrease of $25 billion from the same period last year. Net earnings; however, have dropped 50% from $2.4 billion to $1.2 billion year over year.
While analysts got the earnings predictions correct, they missed with the dividend payment expecting to see $2.56 per share rather than the $2.05 announced by Boeing.
On seeing the results and hearing the news Credit Suisse analyst Robert Spingarn posted a note for investors, which said: “No incremental negative news on MAX will be a relief for most.”
Following the earnings release, Boeing CEO Muilenburg reiterated that getting the MAX back in the air was Boeing’s number one priority, saying in the third-quarter earnings release: “Our top priority remains the safe return to service of the 737 MAX and we’re making steady progress.”
Boeing’s best-selling aircraft was put under a worldwide grounding moratorium following the crash of two 737 MAX aircraft just five months apart that killed 346 passengers and crew.
Why has Boeing decided to increase the production of the MAX?
In their latest press release, Boeing cited the current global trade environment as the reason why it was cutting back its 787 twin-aisle Dreamliner production from next year.
Surely the 737 MAX would also be affected by the trade environment just like the Dreamliner and yet they announce an increase in production.
It just doesn’t make sense!
Now I don’t want to be accused of bashing the 737 MAX as I know a lot of jobs depend upon the future orders, for the plane, but I can’t help thinking that Boeing might be thinking that offense is the best defense.
Boeing CEO Dennis Muilenburg is due to go before Congress next Wednesday, the 30th of October and knows he is in for a grilling over the MCAS issues with the plane. He also knows how damaging the information that has surfaced following the two crashes is with regards to the company.
By showing how confident Boeing is with their product is he hoping to deflect some of the hard questions he will have to answer?
What do you think? Please let us know in the comments.