Updated version 3 - Boeing will not reach its 737 production rate target until early 2027

Additional details on production difficulties of the 737 aircraft added in paragraphs 1 to 4

Dan Catchpole/Shivansh Tiwary

Reuters, Seattle, Oct 27 - Boeing BA.N Chief Executive Officer Kelly Otteberg said Tuesday the company will not reach its target production rate of 47 737s per month until next year, a severe setback for the company's ongoing recovery.

Otteberg said in an interview with CNBC, the company had originally planned to achieve this target in the summer this year (link), but now expects to reach it "by early next year".

In September this year, he stated that Boeing could not produce wings fast enough.

Deliveries of this popular single-aisle passenger jet are the main driver of Boeing’s cash flow.

Although Boeing is still recovering from years of ongoing crises and controversies (link) – incidents that damaged its reputation, depleted cash reserves, and left it heavily in debt – shares of the U.S. plane maker still fell 2.5% in premarket trading.

During the quarter, Boeing obtained approval from U.S. regulators for the 737 MAX 7 (link), won the U.S. Navy’s sixth-generation F/A-XX fighter contract (link), and generated positive free cash flow for the second consecutive quarter; the larger MAX 10 model was also certified in October.

"Market expectations are rising, as they should. We have a more solid foundation than a year ago, but we still have more work to do to clear the backlog, bolster our corporate culture, and improve our daily operations," Otteberg said in a memo to employees after the earnings release.

According to data compiled by the London Stock Exchange Group (LSEG), Boeing reported an adjusted loss of 34 cents per share for the quarter ended September, compared with a market expectation of 21 cents.

Revenue for Boeing’s commercial airplanes unit slipped slightly to $10.7 billion, with an operating loss of $697 million. The profit margin narrowed by only 6.5%, compared to a contraction of 48.3% in the same period last year.

The company attributed its performance to deliveries of lower-margin passenger jets and higher production costs, including supply chain expenses.

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In Boeing's defense division, higher deliveries, improved operations, and a $252 million subsidiary sale combined to lift the segment to a quarterly profit of nearly $500 million. Operating margin reached 6.2%, up from 1.7% a year ago.

Boeing Global Services earned $1 billion in profits with an operating margin of 18.3%.

The U.S. plane maker’s net debt at the end of the quarter was $25.2 billion, down slightly from $25.9 billion three months earlier and $30.4 billion a year ago.

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