Boeing today released its first-quarter financial report. As expected, results were excellent – revenue up 6%, operating profit up 30%, net income up 57%. Good news, but not something we would normally report. However, hidden among the fifteen pages of financial detail was a single sentence that caught our eyes:
“Reflecting the strength of the cargo market, we now plan to increase the production rate on the 767 program from 2.5 to 3 per month beginning in 2020.”
Boeing currently has a backlog of sixty-six 767-300Fs (fifty-nine for FedEx, four for UPS, and three for an unidentified customer), plus 179 767-based aerial refueling tankers for the US Air Force. At the current build rate of 2.5 per month (30 per year), Boeing could adequately deliver the full backlog over the time period expected by these customers. So why the 20% increase?
And before we try to answer that question, we point out that at least one source claims the move from 2.5 per month to 3 per month is just the first of three increases. According to a report in Leeham News, Boeing has asked its suppliers to prepare for a second rate increase, to 3.5 per month in mid-2020, and a third, to 4 per month, in January 2021.
If this is indeed the case, and if the increased rates hold through the end of 2024, Boeing would build eighty more 767s than it would have built at the the current rate.
As we have reported several times over the last year, we believe that both UPS and SF Express have approached Boeing with their desire for new-build 767-300Fs, and we would be surprised if Amazon had not knocked on Boeing’s door as well.
It now looks as though Boeing is prepared to open the door.