Wednesday, January 25, 2017

Boeing CEO commits to increasing 737 jet production in Renton

Boeing CEO Dennis Muilenburg said the jet maker is firmly committed to ramping up its 737 aircraft production in Renton as planned over the next three years.

Muilenburg appeared to go out of his way to comment on a hot debate about the 737 production rate that unfolded among rival aerospace analysts this week.

Muilenburg praised the team at the Renton plant that makes all 737s for Boeing, saying the facility and its workers remain "on track" to dramatically boost 737 output between now and 2019.

"Simply put, this is a big attractive market and the 737 family's position within it is solid," Muilenburg said during a conference call to discuss the company's most recent financial results.

Aerospace industry analyst Addison Schonland last week said he thought Boeing won't boost 737 production in Renton because aircraft orders and the order backlog have peaked and he expects fuel prices to remain low.

Cheap fuel lets airlines delay deliveries of more fuel-efficient aircraft they ordered when oil prices were much higher. Jet makers will respond by not boosting production, as planned, he wrote.

Rival analyst Scott Hamilton, a Bainbridge Island aerospace specialist, disagreed, saying Boeing needed to crank up 737 deliveries to generate cash to support its rich dividend and aggressive stock buyback programs.

Boeing CEO Muilenburg sided with Hamilton's view, noting both that Boeing's 737 production is currently oversold and overall order deferrals for all the jets it produces now represent only two percent of the Chicago-based company's current aircraft order backlog.

"That remains well below our 15-year historical average of six percent," he added.

Boeing has vowed to boost 737 production to 47 aircraft a month this year, up from 42 in 2016. It also has unveiled plans for further monthly production rate increases to 52 737s per month in 2018 and 57 per month in 2019, numbers which Muilenburg reaffirmed during the conference call.

Boeing currently has a total of 4,452 orders for all variants of its 737 aircraft included in its unfilled backlog.

Muilenburg also told aerospace reporters Boeing Commercial Airplanes will continue to press its aircraft manufacturing lines in the Puget Sound region and in South Carolina, as well as its outside suppliers, for even more cost reductions in 2017 to help the operations achieve pretax profit margins in the double digits.

"This will be a relentless effort going forward," Muilenburg said. "While we've made some strong strides over the last couple of years, and you see it reflected in the performance, we have much more ahead of us than what's behind us."

Chief Financial Officer Greg Smith said Boeing was aiming to "obviously" reset the bar on costs " to where we want to be near term and longer term."

(Andrew McIntosh - Puget Sound Business Journal)

1 comment:

Anonymous said...

Except they are ruining a community that has to listen to the testing of those engines.