In fiscal 2016, Boeing (BA) delivered 748 aircraft, which is 1.8% lower than the 762 aircraft it delivered in 2015 and helps explain the company’s revenue decline. However, for 2017, Boeing expects aircraft deliveries to improve to 760–765 aircraft.
Delivery mix to deteriorate
The above decline was also due to a deteriorating delivery mix. For 2017, Boeing has planned to cut production of its 777 by 40% and to begin transitioning to its new 777X. This means the delivery target will be achieved by the smaller and cheaper 737 and 737 Max, thus impacting Boeing’s revenues.
Boeing has managed to secure more than 3,300 orders for the 737 Max since its launch. This should keep it on track to increase its 737 production to 47 per month, starting in 3Q17. These orders and the increased deliveries of the Boeing 787 provide a favorable mix that should help increase Boeing’s profitability and free cash flow generation going forward.
Read more: Boeing Commercial Airplane Deliveries to Rise, Revenues to Follow