In a conference call to discuss Boeing's 2004 earnings, president and CEO Harry Stonecipher acknowledged that big decisions lie ahead mid-year for the 747 and the 767 production lines.
In a conference call to discuss Boeing’s 2004 earnings, president and CEO Harry Stonecipher acknowledged that big decisions lie ahead mid-year for the 747 and the 767 production lines.
He also said that whether or not Boeing will sell its commercial jet parts plant in Wichita, Kan., will be known within weeks. A sale is likely.
The defense contractor and commercial airplane builder’s 2004 earnings figures showed solid operating performance and profits up 20 percent over 2003, despite a big hit to profits in the fourth quarter. That profit decline came mostly from charges related to the stalled Air Force tanker deal and the closing of the 717 line in California.
But with the underlying performance strong and the commercial market recovering globally — though not in the U.S. — Boeing upgraded its forecast for 2005 and 2006.
The Puget Sound-based commercial airplane unit’s revenues for 2004 were $21 billion. This year, the company expects revenue will hit $24 billion, and next year is projected to come in at $27 billion to $28 billion.
Last year Boeing delivered 285 airplanes. The delivery forecast for this year is 320 airplanes, rising to 375-385 next year.
But even as the commercial airplanes unit swings up with the economic recovery, the division could look very different by the end of this year.
Stonecipher said Boeing will make production line shut-down decisions in mid-2005 for both the 767 and the 747 jumbo jet, both of which are assembled in Everett.
The company has given authority to the commercial unit to offer to customers a new 747 derivative, the 747 Advanced, pending board approval. This effort is designed to gauge interest in the new jet and to discover if there are enough potential new orders for the existing 747-400 freighter version to bridge the gap until the new derivative would come into production in 2009.
If that effort fails by mid-year, Boeing will close down the 747 line in 2006.
Following the collapse of the company’s Air Force tanker deal after a procurement scandal, the same fate will befall the 767 line if the Air Force fails to come through with a new tanker alternative by mid-year.
Addressing the Air Force tanker issue, Stonecipher talked in terms of having a range of airplanes that could fit any requirements the Air Force has. That appeared to be a backing away from Boeing’s previous certainty that the tanker would be based on the 767 airframe.
Questioned on this, Stonecipher said that the 767 was still the most likely model for a new tanker.
Stonecipher also said that he expects a decision will come on the sale of the Wichita commercial parts plant in the next 10 to 20 days. That will be followed by extensive discussions on the repercussions with unions representing the 7,300 affected employees on the plant’s commercial side.
He said that he believed the plant would be sold.