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Demand For New Planes Increases

Boeing: Demand for commercial jets improving

Kyle Peterson  Feb 12, 2010

Boeing Co. is seeing improved demand for commercial airplanes and fewer deferral requests as the airline industry claws its way out of an economic downturn, the company's chief executive said on Thursday.

Speaking at an aerospace and defense conference, Jim McNerney said the economy is showing signs of improvement that will lead to airplane orders.

"We have a rebound in our plans over the next couple of years," McNerney said in comments monitored via a webcast of the event.

Goodrich Corp and General Dynamics Corp were other aerospace companies that cited improving commercial aircraft market conditions at the two-day Cowen & Co. conference.

Boeing and its top rival, Airbus, were dogged in 2009 by fewer orders for airplanes as carriers around the world grappled with falling travel demand in the sagging economy.

Boeing said in January that orders fell 61 percent to 263 commercial airplanes in 2009, as air travel and freight transport slumped.

Meanwhile, Boeing's defense unit struggled with sweeping government budget cuts.

McNerney said the company feels "very good" about current production rates for its popular 737 planes and even left open the possibility for a production rate increase.

Some experts have questioned whether the current rate of 31 per months is too high given the economic troubles faced by airlines around the world.

"You could say there's room for an upward move," McNerney said, quickly adding he is not necessarily predicting that. "If people order more planes, we will increase the rate."

McNerney repeated that Boeing also is considering putting a new engine in the 737, which would be faster and cheaper than building a new aircraft.

He said flight testing of its new carbon-composite 787 Dreamliner has revealed no significant problems and that Boeing still aims to deliver the plane to its first customer in the fourth quarter of 2010.

Some market experts have said the delivery schedule for the Dreamliner, which made its first test flight in December after two years of delays, is too ambitious.

Scott Kuechle, chief financial officer of Goodrich, which provides parts for planes, said order patterns for landing gear and interiors were stabilizing. He said his company expected more robust growth in aftermarket services in 2011.

General Dynamics said its aerospace segment, which includes the Gulfstream business jet maker, was poised for low to mid-single-digit sales growth in 2010, followed by "double-digit growth" in 2011 as delivery of new jets begins.

Amid tough conditions in 2009, Gulfstream cut production and temporarily furloughed part of its workforce.

"Barring any further deterioration in the global economy, I believe that 2010 is the start of an attractive growth trajectory in our aerospace business," General Dynamics Chief Executive Jay Johnson said on Wednesday.

Boeing: Demand for commercial jets improving
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