Russian Deal Helps Spark Another Boeing 737 Production Rate Increase

 - September 24, 2010, 10:10 AM
Boeing’s third 737 rate hike since May will see the assembly line in Renton, Wash., produce 38 airplanes per month by mid-2013.

With demand for single-aisle aircraft showing no sign of abating, Boeing has once again announced an increase in its production rate for its 737 program, this time to 38 airplanes per month in the second quarter of 2013. The decision comes as Boeing prepares for a number of expected option conversions and closure of “current sales campaigns,” including an anticipated firm order for fifty 737s with Russia’s State Corporation Rostechnologii. The state-owned company’s supervisory board plans to review the so-called definitive agreement, which includes purchase rights for another 35 of the single-aisle workhorses, next month. Plans call for Rostechnologii to lease the airplanes to Aeroflot and six other domestic carriers chosen for consolidation under the auspices of the Russian flag carrier. As of September 14 Boeing had collected net firm orders for 250 Next Generation 737s this year alone. The backlog already stands at more than 2,000.

Boeing’s latest rate hike announcement follows the company’s June decision to raise 737 production rates in early 2012 from 34 to 35. Just a month earlier it announced plans to go from 31.5 to 34 by that time. 

“Increasing production is in response to customer demand for this airplane,” said Boeing Commercial Airplanes president and CEO Jim Albaugh. “Airlines want this innovative airplane sooner to renew their fleets to serve their customers. We made this decision after careful evaluation by Boeing and our supplier partners.”
Of course, the ability of its suppliers to accommodate a rate increase had to stand as a top consideration. Albaugh and Boeing CEO Jim McNerney on a number of occasions have expressed concern about just that issue. Apparently the suppliers in question assuaged any lingering doubts. 

Meanwhile, Boeing’s 2010 Current Market Outlook projects a market for more than 21,000 single-aisle airplanes over the next 20 years, accounting for an anticipated 69 percent of the airplanes delivered and an estimated 47 percent of the $3.6 trillion total market value.

Boeing predicts that airlines will grow by responding to their passengers’ preference for more flight choices, lower fares and direct access to a wider range of destinations. As a result, carriers will concentrate on offering more flights using more efficient airplanes, rather than on using significantly larger airplanes. In North America alone, Boeing forecasts that single-aisle airplanes will grow from 56 percent of today’s total fleet to 71 percent of the fleet by 2029.

But to what extent Boeing relies on its current 737 model to help satisfy that demand will likely remain a subject of conjecture until the end of this year, when the company decides to either re-engine the existing airframe, pursue a set of fuel-saving airframe improvements or introduce an entirely new single-aisle airplane.