Boeing Co, the world's biggest planemaker, may have to cut jetliner production again after halving the rates in the past year because of continuing losses among US airlines, a top executive said.
Boeing could lower its forecast for next year's jet deliveries unless it wins some key orders in the next few months, and deliveries may decline further in 2004, said Alan Mulally, chief executive of the company's airliner business.
The company, which averted a strike by 25,000 machinists Friday, had said deliveries may rise in 2004. US airline traffic fell 8.6 percent in August from the year-earlier period and even major carriers such as United parent UAL Corp. are weighing bankruptcy, signaling a deeper-than-expected decline.
"You've got 2003, 2004 and maybe even 2005 looking grim," said Richard Aboulafia, an aircraft consultant at the Teal Group in Fairfax, Virginia. He said Boeing's annual deliveries could eventually decline to as few as 200 from 527 last year.
Shares of Boeing fell US$0.87 to US$35.58 in New York Stock Exchange composite trading on Friday. The stock is down 8.3 percent year to date.
Mulally said it's too early to make any new forecasts and for now the company is sticking with plans to build 380 jets this year and 275 to 300 next year. The outlook for 2004 is "cloudier," he said.
"Our production is going to be down, and it's probably going to be down longer than we thought," he said at a press conference in Seattle late Friday. Mulally spoke shortly after the International Association of Machinists said it accepted Boeing's three-year contract offer by default.
Some 62 percent of the union's members rejected the contract and 61 percent supported a strike, short of a two-thirds majority needed for a walkout. Under the union's rules, the contract now takes effect.
Further production cuts may lead to more job cuts, Mulally said. Boeing has already eliminated about 30,000 jobs in the past year. Peter Jacobs, an analyst with Wells Fargo Van Kasper, said 2,000 to 5,000 more jobs could go depending on how much production is cut.
Boeing has open delivery slots starting in the second half of next year.
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