Boeing likely to boost 737, 777 production rates

Boeing is leaning toward increasing production rates for the 737 and 777 families with decisions expected by mid-year, Boeing Commercial Airplanes President and CEO Jim Albaugh said yesterday.

The current 737 build rate is 31.5 units per month and the company expects to make a decision in June on whether to raise it. Last week, Airbus announced it was taking the A320 rate to 36 per month from 34 as of December (ATWOnline, March 10).

Speaking to media at Boeing's Arlington, Va., offices, Albaugh explained that "We made a conscious decision a couple years ago to sell more airplanes than we had production capability to manufacture" owing to the likelihood of deferrals and lapsed options. As a result, production is sold out for 2010-11 and "we're overbooked in 2012."

Turning to the 777, he said, "Stay tuned. We're going to make a decision on that in April. We have three 777 campaigns and I think there is a very good chance we will raise the triple 7 rate as well." The manufacturer currently is trimming the monthly rate to five from seven, he noted, adding, "Depending on our decision in April it will take about 15 months to ramp up." He said it will take somewhat longer to increase the 737 rate.

Albaugh also signaled a tougher negotiating stance in selling airplanes. In what observers took to be a reference to last year's failed Ryanair 737 campaign (ATWOnline, Dec. 21, 2009), he said, "We could've sold 200 more airplanes last year. . .and we didn't take those orders because people wanted them at the bottom of the cycle prices." Referencing the 787, he said, "I believe we sold those a little bit cheaper than we probably should have."

Elaborating on the theme, he pointed to "a backlog of 3,400 airplanes. We don't have to do a deal to keep the production lines running. . .We are going to remain disciplined."

Boeing continues to study the business case for re-engining the 737 but does not feel pressure to make a decision by Farnborough (ATWOnline, March 10). Should it go forward, Albaugh "will do everything I can to reduce the requirements creep so it doesn't become the equivalent of a major change to the aircraft."

He agreed that the CSeries 300 appears to be targeted at the 737-700 market. Refuting speculation that Boeing will not fight hard to defend its position in the under-150-seat market, he stated: "I look at the 737 business that we have and it is one of the cornerstones of Boeing Commercial and it is a marketplace we are going to defend."