ATW Daily News

Carson: Boeing prepared for possible 10% 2010 production cut

Wednesday February 11, 2009

Boeing Commercial Airplanes President and CEO Scott Carson said the manufacturer is "cautiously optimistic" regarding 2010 but is "prepared" to cut aircraft production rates if necessary.

Speaking yesterday at a Barclays Capital investors conference, available via webcast, Carson said maintaining production rates in the current economy has been "a significant concern of ours for some time. . .We have seen a lot of activity in terms of people wanting to defer aircraft." So far, he said, aircraft have been deferred by "a couple of fiscal periods in most cases," enabling Boeing to fill production slots with planes pushed back owing to the recent machinists' strike and those that already were "quoted [to airlines] above production capacity."

He said that if carriers begin deferring aircraft for longer timeframes, production cuts may be necessary next year. But he downplayed predictions by some, including ILFC Chairman Steven Udvar-Hazy, that production cuts could be as high as 35% (ATWOnline, Feb. 9). "My guess is closer to 10% if we have to" cut rates, Carson said. He added that May is the "general window" for making a decision on 2010 production rates.

"We're engaging with our customers on a weekly and daily basis to ascertain where they stand" both in terms of traffic demand and their ability to finance aircraft, he said, adding that Boeing has "a billion dollars available" to help customers with financing "during this period."

Separately, the company announced that its fourth-quarter and full-year 2008 per-share results were 4 cents lower than originally reported owing to "two subsequent events that have been incorporated into the fourth-quarter results (ATWOnline, Jan. 29). The first was a reduction in the collateral values of aircraft in our customer financing portfolio due to the receipt of new third-party aircraft value publications. The second was a liabilities increase resulting from an arbitration award."

by Aaron Karp

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