Boeing Commercial Airplanes CEO Ray Conner, talking with journalists at its UK headquarters, acknowledged a big slowdown in widebody jet orders this year, talked about the progress of job cuts, and offered Boeing’s thinking about various potential new jet models.
Boeing Commercial Airplanes boss Ray Conner said Sunday in London that though the pace of voluntary job reductions in the Puget Sound region has been slower than expected, job cuts will continue through more voluntary buyouts and should total around 4,000 by year end.
That figure doesn’t include any potential job cuts in other Boeing units in the region, such as defense and corporate services.
In a wide-ranging roundtable discussion with journalists at Boeing’s UK headquarters on the eve of Monday’s opening of the Farnborough Air Show, Conner conceded that Boeing has seen a big slowdown in widebody-jet orders this year, which he attributed partly to the uncertainty caused by unrest around the world.
He also addressed the political controversy over the pending big jet order from Iran, suggesting that if Congress moves to block Boeing’s deal, it should also hobble Airbus’ chance of doing business there by blocking the European jet-maker’s U.S. suppliers from participating.
And he offered Boeing’s thinking about various new jet models the company is considering:
- A midsized, midrange jet referred to as the New Middle-market Airplane is clearly the focus right now.
- A larger version of the 737 MAX, dubbed the MAX 10, is being looked at closely but appears to be iffy.
- And a larger version of the 777X, referred to as the 777-10X, is a possibility, but it’s at a very early stage of study.
Regarding the job cuts, Conner said Boeing has shed just over 2,800 jobs in the Puget Sound region this year, almost 2,700 of those in the Commercial Airplanes division.
There have been some layoffs. Last month, the company gave layoff notices to 99 employees, according to data filed with the state.
But Conner emphasized that he’s offering employees voluntary buyouts where possible, and that these will continue.
“With a lot of people being very close to retirement, I would prefer to offer them an incentive to go down that path,” Conner said. “It would be much more controlled and managed so we could maintain our productivity and efficiency as we did this.”
He also said the aging demographics of the workforce means voluntary buyouts will allow Boeing to hold onto younger workers.
Boeing has in recent years brought in “a set of younger people that we’ve expended a lot of time and energy with,” Conner said. “We’d love to keep them.”
“Our demographics are such that it really does lend itself to doing this kind of thing,” he added.
Conner responded aggressively when he was asked about the measure passed in the House of Representatives that would block U.S. aircraft sales to Iran, threatening a tentative agreement to buy 80 Boeing jets worth around $9 billion after standard discounts.
“If we’re not allowed to go forward, then sure as heck no other U.S. company should be allowed to go forward either, and that would be any U.S. supplier to any other manufacturer,” Conner said.
He then listed all of Boeing’s competitors that build planes with U.S. parts – Airbus; Bombardier of Canada; Embraer of Brazil; and COMAC of China – all of whom might thus be blocked by Congress from doing business with Iran.
Conner said Boeing has been “working under guidelines the U.S. government has laid out.” The attempt to block the Iran sale, he added, is “between Congress and the (Obama) administration.”
“We’ll follow the lead of the government,” he said.
Another challenge for Boeing right now is the slow pace of widebody-jet sales this year.
That’s hampering the company’s effort to fill the gap in delivery slots of the current model 777 between now and the end of the decade when the new variant 777X begins to enter service.
Boeing sales chief John Wojick, sitting with Conner at the roundtable, said there’s no clear indication of why things have slowed down.
“Obviously, I’ve got a lot of work to do,” Wojick said. “We’re at 32 (widebody-jet sales) for the year. That’s clearly not good enough.”
Conner suggested that a contributing factor is instability in the world, including economic depression in some Latin American countries, sanctions against Russia, war in the Middle East and the British vote to leave the European Union.
“There’s a lot of things going on right now that’s caused people to pause,” Conner said. “People were in wait-and-see mode. And with fuel prices down, airlines can fly airplanes a little longer to make longer term decisions.”
Minutes before Conner arrived at the Boeing headquarters in London, a march of several hundred chanting Black Lives Matter protesters happened to pass by on the street below.
Even as he spoke of job cuts and a slowdown in big jet orders, Conner also emphasized that Boeing is planning for the future by studying possible new airplanes.
He rejected assertions by Airbus executives that Boeing’s talk of the NMA in 2025 is premature because there won’t be a necessary breakthrough in engine technology that soon.
In an interview before the Air Show, Airbus Americas Chief Executive Barry Eccleston reiterated that skepticism, saying, “I cannot see a new technology engine being available and mature enough for this market until 2030.”
But Conner said it’s a matter of applying recently developed technologies to a new engine of the appropriate size to power a midsize, midrange jet.
He said the new technology inside the big engines for the 777X and the smaller engines for the 737 MAX could be incorporated into the midsize engine he needs. “There’s enough demand that would warrant investing in a new engine of that size,” he said.
He said Boeing’s discussions with airlines have made it clear that the NMA could be a sales success.
“Among the customers we have engaged with, there is clearly a market,” Conner said. “They would love to have an airplane that’s focused on that particular segment.”
What remains is for Boeing to figure out how to produce it at a price that will make money, he said.
Conner was less enthusiastic about two other much-discussed ideas that involve stretching two different airplanes.
One such plane, the 777-10X, would be straightforward for Boeing to do, Conner said, but it’s unclear yet if enough airlines would want to buy it.
Another proposal under study is for Boeing to replace the currently proposed 180-seater 737 MAX 9 with a larger version, a MAX 10, in order to halt the runaway sales success of the Airbus A321.
This option also lacks clarity for now.
“Big customers, United and such, have told us that the MAX 9 is where they want to be,” Conner said. “So we’ve got to make sure there’s truly a big enough market segment if we wanted to move up.”
A MAX 10 would require new engines with beefed-up wings and extended landing gear. In other words, it would be very expensive.
That’s unlike a separate study Boeing has undertaken to stretch – with two extra rows of seats – the smallest MAX version, the 737 MAX 7, which has sold poorly.
Such a design change is a relatively simple, and Boeing officials indicated it’s likely to be formally announced at the Air Show on Wednesday.