What has changed in Boeing’s production and deliveries?
- In the third quarter of 2026, Boeing delivered 124 737 aircraft, up from 121 a year earlier; it delivered 22 787 aircraft, slightly below 24 a year earlier.
- Boeing continues to work toward a sustained 737 production rate of 47 aircraft per month, but said achieving that rate consistently would be delayed until 2027. The company expects to increase the rate to 52 per month in the second half of 2027.
What does stable 787 production mean for Japanese heavy-industry companies?
- The 787 production rate remained at 8 aircraft per month, unchanged from the previous quarter. Mitsubishi Heavy Industries and Kawasaki Heavy Industries jointly produce airframe structural components for the model, and Goldman Sachs believes the stable rate benefits both companies’ production utilization.
- Boeing expects to begin increasing the rate toward 10 aircraft per month during 2026. Goldman Sachs is watching when, and how quickly, it returns to the pre-pandemic level of more than 10 aircraft per month.
- Preparations for increased production also bring upfront costs: Kawasaki Heavy Industries recognized aviation-related ramp-up preparation expenses in advance in the first quarter of the fiscal year ending in March 2027, and its aerospace segment made a slow start to the year in terms of profit. The company expects profits to recover from the second quarter.
How will increased 737 production flow through to engine components?
- AeroEdge supplies components for the LEAP engine used in the 737 MAX. Goldman Sachs believes the stable pace of 737 production and shipments is a positive signal for its supplies.
- The 737-7 received an amended type certificate from the US Federal Aviation Administration in the third quarter, and the 737-10 received one in October. Goldman Sachs will watch whether certification progress can accelerate production increases across the supply chain.
How does Goldman Sachs rate the three suppliers?
- Goldman Sachs rates Mitsubishi Heavy Industries and AeroEdge Buy, with 12-month price targets of 6200 yen and 2800 yen, respectively. It rates Kawasaki Heavy Industries Neutral, with a price target of 2800 yen.
- For AeroEdge, the downside risks cited by Goldman Sachs include stronger-than-expected yen appreciation, delays in product production and shipments, and winning mass-production orders for low-margin projects.