Boeing 737 Cuts Have Begun; It’s Too Late To Call It A Myth

It has officially become impossible to deny that production of the Boeing 737 is slowing down. What are the signs? The first big sign is that Boeing cut production of the 737 this quarter. The second big sign is that Boeing currently has about 40 737 planes parked. Almost half of those parked planes don’t have engines.

About a third of Boeing’s July year-to-date production for 737 aircraft has been for the MAX with the LEAP engine. Roughly 95 percent of Boeing’s current backlog consists of the 737 MAX. Future production will increase the demand share for the MAX to 88 percent. That’s a substantial leap compared to a previous demand share of just 33 percent.

The problem is that the production of the LEAP engine that is needed for this aircraft is not prepared to meet current narrow-body needs. In addition, production of GTF engines will also fall short. These shortfalls are precisely why there are currently Boeing planes sitting around without engines at the moment. LEAP and GTF products are both currently behind schedule on production by four to five weeks. The bad news doesn’t end there. The current production schedules that are in place have already been revised from schedules that were in place at the start of 2018.

There has been a lot of debate lately regarding whether or not Boeing would be forced to lower production in 2019. The reality is that Boeing is in a tough spot due to an inability on the part of turbofan suppliers to meet demand. Many people have been scoffing at the idea of production cuts at Boeing based on total engine numbers.

However, the engine models that are available have no impact on the production of Boeing models that rely on new engines. Older Boeing models with older engines only make up a small fraction of what the company needs to produce for 2019. In fact, the backlog for older models is all the way down to 5 percent at the moment.

Boeing is facing a real challenge because the intricate production processes and design considerations that go into building its 737 aircraft are extremely difficult to put in place. The producers of LEAP and GTF engines simply don’t have the means necessary to ramp up production at the last minute. All of the industry chatter regarding Boeing’s alleged inability to produce is sure to set off alarm bells among investors.