Boeing (NYSE: BA ) has been working hard to increase the production rates of its fast-selling commercial jets, and the company is beginning to see its efforts rewarded. On Wednesday, Boeing released figures for the second quarter of 2013, which show that the company has not only increased deliveries by 13% over the quarter, but also delivered more planes in a quarter than it has since 1998. For 2013 to-date, it has also beaten its chief competitor Airbus on deliveries. While the company has a lot of work yet to do in meeting its massive $322-billion commercial jet backlog, this successful uptick in production and deliveries is a very positive sign.
Boeing delivered 169 planes in the second quarter, making 306 complete deliveries for the year, so far. About 70% of these were Boeing's 737 Next Generation, a narrow-body jet due to be replaced by the 737 MAX in 2017. The 737 is already Boeing's highest-output program, and Boeing is in the process of boosting production 35 to 48 jets per month.
The second quarter also saw Boeing resume delivery of the flagship 787 Dreamliner, the company's most technologically advanced jet. The company delivered just one of the wide-body planes in the first quarter, as battery problems kept the global Dreamliner fleet grounded for nearly four months. Boeing delivered 16 more Dreamliners in the second quarter, each at a list price of over $200 million. The company is aggressively trying to raise production rates on the Dreamliner to 10 planes per month, an effort it will have to execute quickly if Boeing is going to hit its goal of delivering 60 Dreamliners in 2013.
For investors, this is good news. While Boeing has all the demand it can handle, the company doesn't get paid if it can't supply its planes, and the company has struggled in the past to successfully ramp up production. Careful, incremental increases in building rates, without more serious incidents like the 787 grounding, are exactly what Boeing needs to focus on to take advantage of its market opportunity.
Boeing's order backlog will only grow as the global economic recovery strengthens, as increased demand for air travel forces airliners to expand and upgrade their fleets. Air travel is just one of the key business areas that will inevitably improve with a stronger recovery. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," outlines how Boeing, and two other key industrial companies, could take off when the global economy gains steam. Click here to read the full report!
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