Boeing Foresees Slower 787 Production Ramp-Up Due To Supplier Shortages: Report (UPDATED)

In the latest development, Boeing Co. BA has reportedly projected a slower increase in the production and delivery of its 787 widebody jets. This is primarily due to supplier shortages,

What Happened: Scott Stocker, the 787 vice president and general manager, disclosed the situation to employees at the South Carolina facility via a memo on Monday, Reuters reported. Despite the hurdles, Boeing is determined to incrementally increase its rate to cater to the “strong demand”.

The memo highlighted, “We continue to manage through supplier shortages on a few key parts.”

It also mentioned that customers have been notified about the anticipated slower increase in production and deliveries.

The Federal Aviation Administration (FAA) is keeping a close watch on Boeing’s challenges in procuring certain parts and is in constant communication with the company. The agency’s primary concern is to ensure that only safe and compliant airplanes are dispatched from the factory.

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Boeing, scheduled to announce earnings on Wednesday, is facing scrutiny over the manufacturing of its 777 and 787 widebody jets. This comes in the wake of allegations by company engineer Sam Salehpour at a U.S. Senate hearing last week, who pointed out inadequate shimming in some areas of the 787 Dreamliner.

Furthermore, the company’s separate production of its 737 MAX single-aisle jet in Washington state has experienced a significant decline, as U.S. regulators tighten factory inspections and workers slow down the assembly line to complete outstanding work.

A Boeing spokesperson confirmed to Benzinga about the memo but refrained from divulging further details.

Why It Matters: The latest development comes on the heels of 32 whistleblower complaints against Boeing over the past three years, with allegations of employer retaliation being investigated by the U.S. workplace safety regulator. This has raised significant safety concerns for the company.

Moreover, as Boeing prepares to release its Q1 earnings, investors are keen to see if the company’s performance can offset the recent scandals that have tarnished its public image.

Price Action: On Monday, the stock closed at 170.48, with a slight increase of 0.22% from the previous close.

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Editor's note: This story has been updated with a comment from Boeing on the aforementioned memo