It’s a long way of saying that we’ve made step function changes in how we inspect, where we inspect and how we do that together. The benefits in the short term have been we’ve seen about a 15% improvement in quality. That’s just here in the first quarter. My expectation is that by the second half of this year, we’ll actually see a step function change in the level of quality. Our ultimate goal is always to drive this back in a position where the work is performed and eliminate the need for so many different inspection points. And I believe that will take place over time and probably faster than most people expect. Maybe I’ll stop there and see if that touches on your question.
Jason Gursky: Yes. No, it’s great. Maybe just one quick follow-up to that. I’m sorry, Ryan, doing that. But — okay. So it sounds to me like process will get better, learning will happen more quickly, probably more inspections going on here. But does this represent kind of a whole scale change in the way that both you and Boeing are approaching manufacturing? Or is this more kind of an evolutionary kind of thing? And there is a really visible path on how we’re going to get all of this done in a relatively timely fashion. I’m just trying to understand how big of a change this really represents and how hard it’s going to be?
Patrick Shanahan: Well, I think good portion of the hard work is done. The hard work was moving this activity 2,000 miles closer to where the work is being done physically stand up the operation and normalize the inspection process, that work is behind us. We did ran 2 fuselages through the process in March 18, in April. And in the month of May, we’ll exceed the production rate of our internal operations. So we’ll start to burn down the backlogs. I think the heavy lift has occurred. Now it’s really utilizing the findings to rapidly improve the quality and position, which is really the foundation to get to the higher rates. I mean this all supports rate 42, rate 47 and beyond. So that part will be incremental. The big step function of realigning the two companies and where the work is done, I think, is behind us, but it’s significant.
Operator: The next question comes from the line of David Strauss with Barclays.
David Strauss: One clarification question and my main question. The 55 MAX units that you didn’t ship in the quarter but produced, how many of those at this point have gone through this joint verification process and a That’s my clarification question. And then my main question on Airbus and the negotiations there, Pat. Has there been any progress on the pricing side? Or did the pricing negotiations kind of get put to the side at this point, given it sounds like you’re potentially negotiating with Airbus to take back the A220, A350 work as part of a potential acquisition with — from Boeing?
Patrick Shanahan: Sure. Let me address the first question. Mid-May, we’ll start processing the first unit from the finished goods, work in place buffer and then we’ll burn those down in terms of the advances we’ve been paid on by the third quarter. Maybe more broadly to the subject of Airbus, I just maybe start out with we have lots of conversations with Airbus on many different levels. The majority of the conversations tend to focus on the integrity of supply given the significant ramp-ups on the 350 and the 220. And just kind of remind everybody, the ramp-up on the 350 is an increase of 43% this year in addition to delivering the ULR in the first freighter. On the 220 side, it’s an increase of 52% in 1 year. So as you can imagine, there’s an intensity of conversations going on there.
We have never stopped talking about price with Airbus. We haven’t made the progress, we’ve never stopped talking about price. And maybe to the third point, we’ve explored other economics and different relationship in our production system. And I won’t go further there. But there’s a path forward on all fronts, and we’ll continue to partner with Airbus.
Operator: The next question comes from the line of Ken Herbert of RBC Capital Markets.
Ken Herbert: I just wanted to follow up on the — yes, I just wanted to follow up, if I could, on the Airbus side, and I apologize if you you’ve already addressed this. But what would you characterize for the A220 line, in particular, as sort of incremental investments to support the rates that Airbus has talked about in terms of mid-teens? You’re looking at substantial growth this year. I think the growth profile was pretty aggressive over the next few years. And Airbus has been pretty vocal about pushing as much cost on to the supply chain as possible. Can you talk about that investment profile with you to support sort of a mid-teens rate on that particular program, I guess, predominantly, that would be within the Belfast facility?
Mark Suchinski: Yes. Ken, as you said, and Pat just mentioned it, we’re talking about a 50-plus percent increase in deliveries in ’24 compared to 2023. And then when you do the projection of getting to 14 a month in the ’25, ’26 time frame, that’s essentially more than doubling from where we were last year. So there’s no doubt we have capital investments that would be required in our Belfast facility from a property plant and equipment, things like autoclaves and other significant pieces of equipment. So that CapEx has to start to take place in the back half of this year and into 2025 so that we can meet those production rate ramps that our customer is asking for.
Ken Herbert: Can you put a finer point on that CapEx? Or maybe another way to ask it, Mark, is what staffing level are you at the Belfast facility and how much hiring would you have to do there to support the higher rate?
Mark Suchinski: Yes. So right now, we’re staffed to meet the current requirements. We’re not overstaffed there. We’re still adding people to support the higher production as we move to the middle and into the back half of the year. So first things first here, as we said, we’re looking at delivering somewhere in the ballpark of 90 to 100 units this year. And we did around 60, a little more than that last year. So while we’re in the process of bringing those folks on board, we call it green labor, training them, getting them on the bar lines, getting them through the learning process, but we’re in the process of hiring those people to support the rate ramp here, but there’s more work to be done. As we think about ’25 and ’26, there will be additional CapEx required. There will be further hiring that will be need to be done and further alignment by the supply chain.
Operator: The next question comes from the line of Myles Walton of Wolfe Research.
