Planemaker Boeing Co. has been granted approval from the US Federal Aviation Administration (FAA) on Friday to increase its 737 MAX production rate. The FAA eased an unprecedented cap, allowing the planemaker to raise output to 42 planes per month, up from the 38-plane restriction imposed in January last year.
This move is seen as a major step in Boeing’s effort to restore financial stability and address the intense scrutiny over its manufacturing quality.
The 38-plane ceiling was imposed following a mid-air emergency in January 2024. The incident involved an Alaska Airlines 737 MAX 9 where a door plug, missing four critical bolts, blew out of the fuselage at 16,000 feet.
The FAA probe into the near-catastrophe revealed widespread production safety and quality lapses across Boeing’s operations.
FAA Administrator Bryan Bedford confirmed the decision to Boeing CEO Kelly Ortberg on Friday, according to Reuters, saying the planemaker is ready to handle the higher volume.
The American aviation regulator said on Friday its safety inspectors “conducted extensive reviews of Boeing’s production lines to ensure that this small production rate increase will be done safely.”
Boeing said it appreciated “the work by our team, our suppliers and the FAA to ensure we are prepared to increase production with safety and quality at the forefront.”
Financial Impact
Increasing deliveries of the popular single-aisle aircraft is crucial for restoring the company’s finances after years of crises and disruptions left it heavily indebted and losing money.
Boeing currently holds $53 billion in debt, a stark contrast to the approximately $12 billion in 2018. The production hike would allow the company to cut this debt and leverage its substantial inventory.
Boeing has $11 billion in raw materials stockpiled—a buffer built against persistent supply chain bottlenecks, according to its second quarter results filing.
Regulatory Scrutiny
Boeing continues to face significant regulatory and legal fallout from the January incident.
Last month, the FAA proposed a $3.1 million penalty against the planemaker for a series of safety violations.
The FAA found hundreds of quality system violations at the company’s 737 factory in Renton, Washington, as well as at the 737 fuselage factory operated by subcontractor Spirit AeroSystems in Wichita, Kansas, between September 2023 and February 2024.
Furthermore, the Alaska Airlines emergency prompted the US Justice Department, under then-US President Joe Biden, to open a formal criminal investigation into the matter.
Following the FAA approval, Boeing shares rose 1.2% in after-hours trading.
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