Thursday, January 21, 2016

Boeing announces 747-8 rate cut, $885M charge

Boeing will reduce 747-8 output for the fourth time in less than two years and record a $885 million pre-tax charge when the company releases fourth quarter financial results on 27 January.
 
Starting in September, the 747-8 assembly line will complete 0.5 aircraft per month, down from 1.3 currently. Boeing has already announced plans to reduce the rate to one per month in March.
 
“We are closely monitoring the air cargo market as we work to win additional orders to support ongoing future production,” says Greg Smith, executive vice-president of Business Development and Strategy and chief financial officer.
 
Boeing currently has seven 747-8 Freighters and 13 747-8 passenger variants in firm order backlog, but even that appears artificially high. The number includes orders for four 747-8s by Transaero, which has declared bankruptcy, and two by Arik Air, which has announced it has no intentions of accepting delivery.
 
At the same time, Boeing has an opportunity to replace the iconic VC-25A fleet, which the US Air Force operates as Air Force One to transport the president.
 
The USAF announced last January that the 747-8 will be the platform that replaces the 747-200s now in service. A contracting notice is expected to be released within a few weeks, which will set the stage for the competitive phase of the integration effort.
 
But the USAF has not yet clarified the timing and number of deliveries for the presidential aircraft replacement program.
 
(Stephen Trimble - FlightGlobal News)

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