Boeing Company (BA.US) has received approval from the FAA to increase the monthly production limit of 737 MAX aircraft to 42.

The Federal Aviation Administration (FAA) announced on Friday that Boeing Company (BA.US) has been granted approval to increase the monthly production limit of the 737 MAX model to 42 aircraft. This breaks the previous production limit of 38 aircraft since January last year and helps the company strengthen its financial situation while addressing safety and quality concerns. The FAA imposed unprecedented production limits shortly after an air crash in 2024. The accident involved a new Alaska Air Group, Inc. 737 MAX 9 aircraft, which had four crucial bolts missing from the door latch, resulting in a massive crack in the fuselage at an altitude of 16,000 feet (4,900 meters). This was one of several incidents where Boeing Company had issues with production safety and quality. The increase in deliveries of this popular aircraft is crucial for Boeing Company to recover its financial stability. In the past few years, due to production interruptions and a series of crises, Boeing Company has been heavily in debt and continued to incur losses. Aircraft manufacturers receive most of the payment from customers upon delivery of the aircraft. The FAA stated on Friday that its safety inspectors had conducted a comprehensive review of Boeing Company's production line to ensure that the slight increase in production rate could be safely implemented. Boeing Company plans to quickly accelerate production rate Sources revealed that FAA Administrator Bryan Bedford called Boeing Company CEO Kelly Ortberg on Friday to confirm that the manufacturer could increase production to 42 aircraft. The sources also stated that Boeing Company plans to swiftly ramp up production accordingly. Employees at the company's facilities in the Seattle area are preparing diligently to increase the production rate of 737 aircraft by adding equipment, and two other sources familiar with the matter confirmed this. Boeing Company stated: "We appreciate the effort made by our team, suppliers and the FAA to ensure that we can increase production efficiency with safety and quality as the top priority." Boeing Company has previously produced 737 aircraft at a faster rate, but its supply chain is currently under greater pressure. Aviation analyst Glenn McDonald stated that in recent years, wing components, castings, engines, and interiors have posed supply chain challenges for aircraft manufacturers. He mentioned that supply chain issues now seem more sporadic and unpredictable than before the COVID-19 pandemic. In the past, supply chain problems often had more systemic impacts. He also noted that a factory fire in February led Boeing Company to urgently seek new specialized fastener suppliers. McDonald said, "Boeing Company seems to be more prepared for this production increase compared to previous situations." With the FAA's enhanced oversight, the company is taking a cautious approach to stabilize and gradually increase production. Boeing Company has stockpiled a significant amount of components and raw materials as a buffer against supply chain bottlenecks. According to its second-quarter earnings report, the company has accumulated $11 billion worth of raw materials. In 2018, when the company was producing over 50 737 aircraft per month, its inventory was $6.4 billion. Boeing Company's current debt stands at $53 billion, compared to around $12 billion in 2018. Wall Street analysts predict that Boeing Company will continue to incur losses this year but are expecting it to turn a profit in 2026, marking the company's first profit since 2018. Last month, the FAA partially restored Boeing Company's authority to issue airworthiness certificates for new 737 MAX and 787 aircraft. In 2019, the authorization for individual MAX aircraft was revoked following fatal crashes in Indonesia and Ethiopia; in 2022, it was revoked for the 787 wide-body aircraft due to production quality issues. In September, the FAA fined Boeing Company $3.1 million for a series of safety violations. Prior to this, the FAA found hundreds of quality system violations at the company's 737 factory in Renton, Washington, and at Boeing Company subcontractor Spirit AeroSystems' 737 fuselage factory in Wichita, Kansas, between September 2023 and February 2024. The Alaska Air Group, Inc. incident in January 2024 prompted a criminal investigation led by the U.S. Department of Justice under then-President Joe Biden.