Boeing delivers smallest number of planes in years following machinists' strike

Boeing experienced a significant drop in airplane deliveries last month, with only 14 commercial airplanes delivered in October compared to 34 during the same period last year. This marks the fewest deliveries since November 2020. The company had 63 orders in October, including nine 737 Max jets. These delivery challenges are occurring as Boeing is set to implement layoffs affecting 10% of its workforce.

The recent strike by Boeing machinists resulted in workers who were not part of the strike handling the deliveries, as the company focuses on potential hazards and safety requirements amidst the return of machinists to work. Boeing's stock has decreased by 42.5% this year, reflecting the broader challenges faced by the company in terms of production and financial performance.

Despite the strike ending earlier this month, Boeing highlights that it will take weeks for a full restart as machinists return to factories. The company remains optimistic about long-term growth projections for air cargo traffic, aiming to recoup from the current setbacks in production and delivery.

CFM International, a joint venture delivering engines to Boeing, continues to provide Leap-1B engines during the strike, leading to Boeing accumulating an excess inventory of powerplants. However, due to production bottlenecks and lower demand from Boeing, CFM has adjusted its forecast, expecting 10% fewer deliveries this year compared to 2023.

Safran Aircraft Engines, part of CFM, aims to reduce excess inventory created during the strike while simultaneously monitoring critical suppliers to prevent future disruptions. Amidst challenges, Safran anticipates improvements but acknowledges ongoing issues expected to persist into 2025.

Analysts have expressed concerns over Boeing's production difficulties, impacting both the 737 program and the overall inventory levels of undelivered aircraft. The company’s operational performance in the short term is cautious due to these challenges, prompting analysts to give hold ratings until Boeing stabilizes production. Despite facing obstacles, Boeing's industry standing as the world's largest aerospace company remains pivotal even amidst turbulent times.

Barclays also issued a Hold rating for Boeing, emphasizing a watchful stance until the company addresses production stability and increases its delivery numbers. The market reflects skepticism regarding Boeing's current situation, indicating a need for the company to navigate through its current predicament effectively to sway investor sentiment positively towards its operations and financial outlook.