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Boeing Says May Scrap 787-3

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Apr 30, 2006
Feb. 2 (Bloomberg) -- Boeing Co., the world’s second- largest planemaker, will likely scrap the planned 787-3 after Japan Airlines Corp. and All Nippon Airways Co. switched orders to alternate versions.

“It’s my guess that it won’t be part of our product offering in the future,” Boeing’s commercial aircraft marketing head Randy Tinseth said today in an interview at the Singapore Air Show. The plane was specifically designed for Japanese carrier, he said, declining to elaborate on the program costs.

Abandoning the 787-3 would enable Chicago-based Boeing to focus on introducing the more popular long-range versions of the Dreamliner as well as the 747-8. The planemaker diverted resources from the short-haul 787-3 in 2008 as it struggled to move the long-haul types toward production.

“They’ve been wanting to consolidate on one model as much as possible,” said Peter Harbison, managing director at the Sydney-based industry consultant Centre for Asia Pacific Aviation.

Boeing will also reduce the production rate of the 777 twin-aisle aircraft to five a month starting June from seven now because of “challenges in the market,” Tinseth said. The planemaker is considering improvements on the 777 as Airbus SAS readies the A350, he said.

“We’re going to have to take a really hard look at the 777 and decide on how we want to make it more competitive,” Tinseth said at a press conference in Singapore.

767 Production
The company will also postpone a planned increase in production for the 767 and 747-8, he said. Production rates for the 737 will be maintained at 31 a month, he said. The company aims to deliver between 460 and 465 aircraft this year and expects to provide $500 million of finance for plane purchases compared with $800 million last year, Tinseth said. There will likely be fewer cancelations and deferrals this year, he said.

Boeing delivered 481 aircraft last year. Toulouse, France- based Airbus SAS had 498 shipments, retaining the title it has held since 2003 as the largest commercial-plane builder.

All Nippon, set to be the first customer for the Dreamliner later this year, replaced its order for 28 787-3 short-range jets with the longer range 787-8 model last month. Japan Air, Asia’s largest carrier by sales, switched orders last year.

The 787-3 was designed to carry as many as 330 passengers as far as 3,050 nautical miles, compared with as many as 250 passengers and as far as 8,200 nautical miles for the 787-8, according to Boeing’s Web site.

787 Delays
Initially meant to fly in August 2007 and reach customers in May 2008, the 787 has been delayed five times because of hurdles with new composite plastics and an outsourced supply chain that stretched to 135 sites around the world. The first test flight took place last year.

Boeing will probably have about 30 787s built by the time the first is certified for passenger service and delivered, Chief Executive Officer Jim McNerney has said.

The Dreamliner is Boeing’s best-selling new model yet, with orders for 851 at the end of last year. It’s the first plane to be built with a plastic fuselage and has the most extensive electrical system of any commercial aircraft, both of which are meant to cut fuel usage.

Boeing said Jan. 27 profit will rise this year and cash flow will recover in 2011 as deliveries of the Dreamliner and 747-8 jumbo jet begin. In 2011, revenue will rise with the new aircraft and cash flow will be more than $5 billion, compared with about zero this year.

“Boeing’s financial performance is highly dependent on the 787 execution,” Joseph Nadol, Seth Seifman and Rica Mendoza, analysts at JPMorgan Chase & Co., wrote in a Jan. 27 report. “While we are confident that management is moving in the right direction, there could be further bumps in the road.”

To contact the reporter on this story: Sue Ling Chan in Singapore at [email protected]
Last Updated: February 2, 2010 03:24 EST
I'm sure glad we at CAL hitched our wagon to this star. Nice job Larry, try not to let the doorknob hit you on the way out.

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