Saturday, November 1, 2014

Wall Street Speculates On Boeing 737 Production Number, Reasonable?

The discussion has started from Wall Street, is Boeing's rate goal of 52 737's a month by 2018 too much too soon? A good piece was written concerning this question in the financial markets. Since blogging is a research based method of madness, I responded to the article in my typical fashion of examining the multiple layers found in decision making. The 52 a month production goal for the 737 has many layers to that decision. This opinion piece takes a broad stroke at Boeing's position from the financial position. Boeing looks at it from the marketing perspective, as it tries to superseed the Airbus production numbers and customer appeal synergy in play. First I will share my response on this well presented article.

Is Boeing’s 737 Production Hike Justified? Click Link

Response from this blogger:
I was convinced on 52 a month for Boeing's optimal benchmark for 737 production of aircraft. After reading your thoughts I can see your point of view. However, I will only offer this counter point, considering a full transition plan is installed by Boeing for making 52 737's, and achieving a benchmark of actually producing 47 a month during this current timeline in 2016. Boeing has announced for the 47 unit benchmark in the next couple of years. Boeing may allow some breathing room for its suppliers after the 47 units are reached during the MAX transitions period on the production floor. The important missing number is how many orders (737's) is Randy Tinseth harboring in his coat pocket? A large potential pocket number, in itself, would motivate a 52 production number, if they win some more sweeping orders away from Airbus.
That could happen in the China market quickly. Boeing then should transition to a 52 "production capability" without actually building 52 a month, until SIGNIFICANT orders are signed, making a certain backlog or build-up of 737's. The missing data for going 52 is in Boeing's suit pockets for potential, but realistic orders.

After further review of this statement made in hast of posting a response. It still stands that Boeing will keep the flexibility of going for 52 as it has some unannounced order cards up its sleeve not yet ready for prime time announcing.