GRAHAM WARWICK / WASHINGTON DC
717 production may be ended and sonic cruiser launch delayed as manufacturer reels in terror attack aftermath
Boeing expects to deliver as few as 350 commercial aircraft next year, down from its previous estimate of the "low 400s" in the wake of the 11 September terrorist attack. Prior to the attack, the company had expected to deliver 510-520 aircraft next year.
In the aftermath of the attack, Boeing is studying whether to close the 717 production line and is likely to delay launch of its sonic cruiser high-speed aircraft, says chairman and chief executive Phil Condit. The company's Connexion subsidiary has been refocused on the aircraft security and military communications markets, which is expected to delay roll-out of its airborne internet service for passengers, he says.
Announcing a 14% increase in third-quarter net income to $713 million, on sales up 15% to $13.7 billion, Condit says Boeing now expects to deliver 522 commercial aircraft this year. This is down from the originally forecast 538 deliveries, but up from the estimate of around 500 immediately following the attack.
The increase is largely a result of efforts to arrange financing for customers scheduled to take delivery of aircraft. Boeing Capital is now expected to provide an additional $1 billion in financing for airlines by year-end, for a total of $4 billion this year, and $3.5-4.5 billion of customer financing is expected to to provided next year, despite the drop in deliveries.
Boeing Commercial Airplanes delivered 120 aircraft in the third quarter, up from 117 in the same period a year ago - 29 aircraft were shipped after 11 September, 19 fewer than anticipated. Revenues and earnings in the company's Military Aircraft & Missile Systems and Space & Communications sectors increased in the quarter, and Boeing still expects total revenues to be around $58 billion this year.
The revenue forecast for next year has been reduced to around $56 billion, with increased military and space sales offsetting lower commercial aircraft deliveries. Boeing is forecasting delivery of "350-400" aircraft but, with shipment of some aircraft built this year likely to be pushed into 2002, analysts expect production to drop as low as 320 aircraft next year, a level not seen since the mid-1990s. Although 2003 deliveries are forecast to be lower still, Boeing Commercial Airplanes is expected to remain profitable.
"We have looked at all our lines, and every one is economic except the 717," says Condit. Boeing will study what action to take with the 717, including the option of closing the line, over the next three months, "but we are comfortable with all the others", he says. Condit refuses to comment on a Seattle Times report that it will cut production of its other airliners from 43 a month to 23 a month by mid-2002. "We are coming down quickly in rate," he says.
Deliveries of the 717, a project acquired with the takeover of McDonnell Douglas, started in 1999 and now total 80 aircraft. An additional 77 firm orders are held, although there are question marks about some of the orders.
Product development will be refocused on "committed programmes" and technologies which are on the critical path for development of the sonic cruiser. "Nothing we have seen since 11 September has reduced the commitment to the sonic cruiser, says Condit. "But the timing may move a little."
Source: Flight International