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Boeing Still Plans to Boost Output of 737 Jets Despite Latest Glitch

Boeing Still Plans to Boost Output of 737 Jets Despite Latest Glitch
A Boeing Co. 737 Max 7 jetliner sits on the tarmac during preparations ahead of the Farnborough International Airshow (FIA) 2018 in Farnborough, U.K., on Sunday, July 15, 2018. The air show, a biannual showcase for the aviation industry, runs until July 22. Photographer: Simon Dawson/Bloomberg

Boeing Co. is moving ahead with plans to hike output of its cash-cow 737 jetliner while dealing with the ripple effects from a new production flaw uncovered by one of its largest suppliers.

The US planemaker isn’t altering the schedule for its 737 suppliers, including rate increases, Chief Executive Officer Dave Calhoun said Tuesday at a virtual gathering of shareholders. Bloomberg reported earlier this month that Boeing intends to hike output of its workhorse narrowbody jet by 23% by midyear.

Calhoun said that Boeing understands the work it faces to repair affected airplanes in production and storage, but he provided few new details about the 737 disruption, which the company disclosed last week. He told investors that the latest operations stumble wouldn’t stop Boeing from reaching its annual target of churning out $10 billion in free cash by mid-decade.

Read more: Boeing’s New 737 Woes Are an Ugly Plot Twist in a Comeback Tale

Boeing shares rose as much as 1.6% in New York trading, erasing an earlier decline.

Returning the 737 Max to pre-grounding production levels is crucial if Boeing is to return to being the prodigious cash generator that made it a darling of Wall Street last decade. The planemaker had seemed to be turning itself around after delivering more jets in the first quarter than rival Airbus SE, for the first time nearly five years.

Then came the revelation, late on April 13, of a potentially costly new issue affecting hundreds of 737 Max built since 2019. The bombshell clipped about $7 billion from Boeing’s market value in trading the next day. For investors, it was a reminder that the companies supporting Boeing and Airbus factories are grappling with their own quality and labor issues, adding risk to plans to rapidly crank up aircraft production.

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