By Dan Catchpole and Shivansh Tiwary
SEATTLE, Sept 16 (Reuters) – Boeing CEO Kelly Ortberg said on Wednesday it is taking “longer than expected” to stabilize the 737 MAX production rate at 47 jets a month, and he downplayed expectations that China would announce a large jetliner order during a political summit next week.
Boeing’s share price dropped about 2.5% immediately after his comments. The price was down 4.5% for the day.
Increasing output of the popular single-aisle jetliner is critical to the company’s financial recovery after years of crises that have left it with nearly $26 billion in net debt and a bruised reputation.
Ortberg said that the largest variant of 737 MAX, the 737-10, will be certified “very soon.” Certification of the 737-10 is several years behind schedule and makes up about 30% of all 737 orders. Earlier this year U.S. regulators certified the smallest variant, the 737-7.
In his comments at a conference hosted by Morgan Stanley, the CEO also downplayed some expectations among industry analysts that China could make another Boeing order when President Donald Trump meets Chinese President Xi Jinping in Washington next week.
China committed to 200 jets when they met last May in Beijing.
Delays in engine supply for Boeing’s 787 Dreamliner have delayed plans to increase production of the twin-aisle jetliner to 10 a month. The company currently is producing eight Dreamliners a month, but slow certification of premium seats has reduced deliveries, Ortberg said.
“So, I think you’re going to still see us, even though we may have a pretty good roll out rate of eight a month, you’re going to see us be a little bit lumpy here month to month on 787 delivery,” he said.
The slower 737 and 787 rate increases mean that Boeing likely will not get to $3 billion in free cash flow, the upside of its guidance given in January, and instead generate $2 billion, the midpoint of its guidance, Boeing Chief Financial Officer Jay Malave said.
(Reporting by Dan Catchpole in Seattle, Editing by David Gregorio and Jonathan Spicer )
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