Boeing Co.'s 737 Max deliveries for the year will be at the "low end" of guidance, according to a top executive at the aerospace and defense company. This announcement has caused the company's stock to fluctuate between gains and losses in midday trading.
Chief Financial Officer Brian West revealed that previously disclosed problems with some of Boeing's 737 Max jets will affect approximately 165 planes in inventory as of the end of the second quarter. This disclosure was made during a conference with industrial-sector companies hosted by Jefferies.
Impact on Deliveries
In the near term, these problems will have an impact on deliveries. However, Boeing has no intention of changing its master schedule. Despite this setback, Boeing's demand remains strong, and the delivery schedule for the Max planes will remain unchanged. The company expects to deliver 400 to 450 of the 737 Max jets this year, but it anticipates that the number will be at the "low end" of guidance.
To tackle these challenges, Boeing has deployed a significant workforce to resolve the issues and ensure stability in their factory. While the delays are frustrating for customers, investors, and employees, Boeing is committed to transparency and believes that it will emerge stronger from this experience.
Maintaining Financial Guidance
In addition to discussing delivery issues, West reaffirmed Boeing's free cash flow guidance for the year, which is expected to be between $3 billion and $5 billion.
Boeing shares have gained 14% year-to-date, slightly trailing behind the advance of about 17% for the S&P 500 SPX.
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