Boeing “Feeling Good” About Production Plans
Boeing Commercial Airplanes plans to maintain current production rates through the end of this year and projects little likelihood that it would have to trim production by more than 10 percent next year, notwithstanding calls for far steeper cuts expressed by ILCF chief Steven Udvar Hazy.
“Two of our customers made pronouncements about how far the industry would have to cut due to demand softening in the freight and passenger marketplace,” noted BCA president and CEO Scott Carson. However, he said, Boeing’s decision not to increase 737 production rates 16 months ago and its practice of 20-percent overbooking has already served it well during the early part of this down cycle. Carson also noted that airplanes not delivered during the two-month strike last year will serve as so-called backfill, further mitigating the risk of production rate cuts this year.
Although Carson admitted to “a lot of activity in terms of people wanting to defer aircraft,” the numbers of airplanes involved and the relatively brief postponements have left him and the rest of Boeing management “feeling good about 2009” and “cautiously optimistic about 2010.”
Still, Carson wouldn’t completely rule out a rate adjustment this year, but he did reject any notion of a large-scale cut. “We think we can manage our way through with a minimum of disruption to our customers and a minimum of disruption to our production system,” he said. “We can argue over what’s minimum, but right now we’re not seeing certainly anything that would look like a 50-percent swing. My guess is closer to 10 [percent] if we had to do something.”