Struggling aerospace suppliers may not be able to support jet output hikes - survey

Boeing 787 Dreamliners are shown in final production at widebody factory in North Charleston
Boeing 787 Dreamliners are shown in final production at widebody factory in North Charleston, South Carolina, U.S., January 17, 2019. REUTERS/Eric Johnson

Feb 16 (Reuters) - Meeting Boeing Co (BA.N) and Airbus SE's (AIR.PA) planned jet output hikes this year will not be a "slam dunk" for the aerospace supply chain, a Morgan Stanley survey of 80 suppliers showed on Thursday.

While the aerospace sector seeks to speed up its recovery from a pandemic-led slowdown as a travel boom spurs demand for jets, inflationary pressures and labor availability are impeding their progress and have dampened sentiment, the survey showed.

"This comes as a surprise as we would have expected for sentiment to improve considering the industry focus on labor, inflation and supply chain," Morgan Stanley analyst Kristine Liwag said in a note.

Boeing and Airbus have struggled to raise jet production amid parts and labor shortages. The U.S. planemaker aims to raise production of its bestselling 737 MAX narrowbody jetliner from a stable rate of about 31 jets a month to 38 by the year end.

Arch-rival Airbus, meanwhile, said on Thursday it was slowing the production ramp-up of its top-selling model.

Worker shortages continue to be the "biggest constraint" for Tool Gauge, a company responsible for crafting interior components for the 737 MAX and 787, Chief Executive Debbie Lee told Reuters earlier this month.

About 63% of those who responded to the Morgan Stanley survey, conducted at the Pacific Northwest Aerospace Alliance Annual Conference outside of Seattle, were smaller suppliers with less than $100 million in annual revenue.

"There's always about a dozen suppliers that are in deep distress that we're having to work with," the boss of Spirit AeroSystems said earlier this month.

Boeing shares were down 1.1% in morning trade amid broader market declines.

Reporting by Abhijith Ganapavaram in Bengaluru and Valerie Insinna in Washington; Editing by Shinjini Ganguli

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