Tuesday, January 26, 2016

Boeing reduces 747 production rate to single digit

Boeing announced further reduction in production rate of the 747-8 program due to lack of new order.

In September 2016, the production will decline from one airplane per month to 0.5 per month, producing just six aircraft per year. Boeing had previously announced that the rate would drop from 1.3 per month to one per month in March 2016.

With a backlog of 20 orders, the decision will help Boeing to keep its Everett 747 assembly line humming until 2017.

Boeing said to account for the market and production impacts, the company will recognize a $569 million after-tax charge ($0.84 per share) when it announces financial results for the fourth quarter of 2015.

On a pre-tax basis at the segment level, Boeing Commercial Airplanes will report a charge of $885 million.

"Global air passenger traffic growth and airplane demand remain strong, but the air cargo market recovery that began in late 2013 has stalled in recent months and slowed demand for the 747-8 Freighter," said Ray Conner, Boeing vice chairman and president and CEO of Boeing Commercial Airplanes.

"While we remain confident in the 747-8's unique value-proposition and an upcoming replacement cycle for late-model 747-400 Freighters, we're taking the prudent step to further align production with current market requirements."

The four engined Boeing 747, which revolutionized the air transport industry in 1970s and its European rival Airbus A380, lost market with the advent of more fuel efficient new generation twin jets like Boeing 787 and Airbus A350.