Boeing To Boost Production
Boeing contemplates boosting production of its best-selling models
Boeing Co. executives said Thursday that extra costs from delayed commercial-aircraft programs won't be finalized until later this year, but the company is looking to boost production of its best-selling models amid improving airline-industry and finance conditions.
Analysts say Boeing faces billions of dollars in payments to compensate airlines and reimburse suppliers in the wake of a 2½-year delay in delivering the first 787 Dreamliner aircraft.
James Bell, chief financial officer, said Chicago-based Boeing still expects to deliver the first 787 to launch customer All Nippon Airways Co. of Japan by year end. It aims to boost monthly production to 10 Dreamliner jets by the end of 2013, aided by a second assembly plant in South Carolina, the company's first outside Washington state.
Mr. Bell said Boeing is three-quarters of the way through negotiations with suppliers and customers about reimbursing them for the 787 delay.
The potential profit from the new aircraft—which has 860 orders—will play a role in Boeing's decision about whether to revamp or replace its 737 and 777 models.
Chairman and Chief Executive Jim McNerney said the company wouldn't tackle the two projects simultaneously, but was inclined to boost production rates—especially for the 737—because it is "effectively" sold out of airliners through 2012.
Mr. McNerney was upbeat about the fortunes of Boeing's commercial unit during an investor- day presentation, while signaling that growing the company's similarly-sized defense unit hinges on boosting international sales.
He said Boeing isn't considering any large acquisitions, and added that the commercial business is bolstering the company's cash reserves. "We will have a lot of cash," Mr. McNerney said.
Boeing and archrival Airbus largely kept production intact through the airline-industry downturn—confounding the views of many suppliers and analysts—and both plan to raise output further over the next two years.
Mr. McNerney said he doesn't expect the order for another delayed program—providing aerial refueling tankers for the U.S. Air Force—to be split. Boeing is expected to bid for the contract, vying with Airbus parent European Aeronautic Defence & Space Co.
Boeing left its full-year sales and production guidance unchanged.