Boeing to increase 777 production in 2013
NEW YORK — Boeing said Monday it's again increasing the production rate for its 777 aircraft due to strong customer demand.
The Chicago company will boost output to 8.3 of the 777 planes a month in the first quarter of 2013. In March it announced plans to increase production to seven airplanes per month from five starting in the middle of next year.
United Airlines first placed the 777 into service in 1995. There have been 907 deliveries of the aircraft, which comes in several different versions including a freighter. Several major commercial airlines use the long-range Boeing Co. plans to boost output of the 777 jet 66 percent by 2013, a move that will add revenue as the planemaker prepares to announce a seventh delay to its 787 Dreamliner.
Production of the 777s will rise to 8.3 aircraft per month in the first quarter of 2013, the Chicago-based company said today in a statement. In March, Boeing said the manufacturing rate would rise starting in mid-2011 to seven planes a month from five now.
The increase is “a significant endorsement of global demand, especially from developing economies,” Peter Arment, an analyst with Gleacher & Co. in Greenwich, Connecticut, wrote today. He increased his earnings estimates for 2013 and 2014.
Boeing, which gets the majority of its revenue upon delivery of new jets, is boosting production for the twin-aisle 777 and the 737 single-aisle jet as demand recovers after the recession. Deliveries of those planes are providing Boeing's main income stream as delays mount on the Dreamliner, now about three years behind schedule amid parts shortages, manufacturing mistakes and redesigns.
The Dreamliner's seventh setback may be more than six months because of fresh problems, including last month's electrical fire during a test flight, the Seattle Times reported today, citing unidentified people who work on or are familiar with Boeing's new jet program.
The systems failures brought to light by the fire added to concerns related to the Rolls-Royce Group Plc engines used on some of the planes. The U.S. Federal Aviation Administration warned the company that certification for long-haul routes may be in jeopardy, the Seattle Times reported.
In addition, Boeing is struggling with continued manufacturing problems including heavy condensation inside the 787s that have already been built and are being stored outside the factory in Everett, Washington, the newspaper said.
The newspaper cited Scott Fancher, the head of the 787 program, as saying the company has “a tough job in front of us.” Boeing said Nov. 24 that it would announce its revised schedule for first delivery in a few weeks. The latest plan targeted the middle of the first quarter of 2011 for delivery to Japan's All Nippon Airways Co.
“There is no doubt we have a lot of work ahead of us,” said Yvonne Leach, a spokeswoman for Boeing. “What we've learned is being applied daily by our teams and in the planning for going forward.” The company expects “in coming weeks” to release a new timetable “that will accommodate the known issues and discoveries on the program -- including the work backlog that exists in the factory,” Leach said.
Gleacher's Arment wrote in the note that the 787 design is sound and certification will slide by four to six months.
Boeing fell $1.76, or 2.7 percent, to $63.27 at 4:01 p.m. in New York Stock Exchange composite trading. The stock has gained 17 percent this year.
The 777, Boeing's most profitable plane, is offered in a variety of configurations and seats more than 400. The average list price is about $258.2 million. Boeing has delivered 907 of the 777 aircraft since it entered service in 1995 and has an order backlog for more than 260 planes.
Boeing said in October that it was considering increasing production on the 737, the world's most widely flown jetliner, to 40 a month from 31.5. The company is considering whether to offer new engines for the plane or wait and work on a whole new replacement aircraft. The 737's competitor is the A320 built by larger rival Airbus SAS, which said Dec. 1 it will offer new engines in 2016.aircraft and FedEx uses the cargo version.
Boeing said it has a backlog of more than 250 777s and that suppliers are prepared for its production increases.
The news of increased production comes despite an announcement from the aerospace giant last week that customers canceled orders for three 777s and one of its 787s. The company declined to say who canceled the orders.
The new 787 has been plagued by delays for more than two years. In the latest problem for the plane, Boeing said earlier this month it was in the middle of a three-week hold on assembling pieces of the 787.
Flight tests stopped last month because of an electrical fire, and the first delivery officially slated for early next year is expected to be pushed back.
Continental Airlines was scheduled to be the first U.S. carrier with a 787, and planned to begin flights between Houston and Auckland, New Zealand, in November 2011. Those are now being pushed into 2012.
Continental will fly a planned route between Houston and Lagos, Nigeria, with a Boeing 777 instead of the 787. Those flights are set to begin in November 2011.