With Boeing back on track to deliver 550 aircraft this year as planned, chairman Phil Condit is using the word 'turnaround', but some feel such confidence is premature.
Boeing delivered 148 aircraft in the second quarter, prompting Condit to declare the production recovery programme a success. 'It's on the basic plan we talked about last September. We have hit the numbers we said we would hit,' says Condit.
Yet Wall Street confidence remains shaky and Boeing shares have slumped by more than 25 per cent. Analysts' chief concern is that Boeing has missed the current up-cycle and still seems unable to make money from selling aircraft. The company admits it will not break even on the first 400 next-generation 737s. Some analysts also worry that the new 737 production line at Long Beach might coincide with the next downturn.
Another question mark hangs over costs. Condit says he can focus on costs now that production is on track. There is scepticism, however, about how much can be done. One analyst fears that the exclusive, long-term deals that Boeing has struck with major carriers such as American Airlines were based on cutting costs by 25 per cent.
Still, there are continuing indications that a chastened Boeing will no longer make enormous sacrifices in the market share battle against Airbus. The company has announced a 5 per cent increase in the price of most of its aircraft, and Condit hints that he will not be drawn into a price war over British Airways' narrowbody order. 'We have made an offer that is as aggressive as we can do. We now have to wait and see what happens,' he says.
Source: Airline Business
