SEATTLE (AP) -- Even as Boeing's largest customer retrenches and U.S. airlines continue to struggle, the company's commercial jet division says its already-halved production plans have not changed and that overseas markets are offering glimmers of hope.
But analysts said the future of Boeing Commercial Airplanes is going to increasingly depend on its ability to be the aircraft maker of choice for low-cost carriers.
American Airlines, Boeing's biggest customer, announced Tuesday a major restructuring that includes cutting 7,000 jobs by March 2003 and retiring its fleet of Fokker 100 jets. It also said in a statement that it has deferred deliveries of 35 Boeing aircraft in 2002.
and will try to defer or cancel new deliveries going forward.
The deferrals -- two 777s, five 767s, and 28 737s -- had been announced last year, said Marty Heires, an American Airlines spokesman. He said the airline is continuing talks with Boeing on deferring or canceling orders for another 67 jets scheduled for delivery between 2003 and 2008.
But Boeing spokesman Tom Ryan said American's cutbacks were expected and factored into the aerospace company's decision to slash production in half following the Sept. 11 terrorist attacks. He said Boeing's delivery forecasts for 2003 haven't changed, but he would not speculate beyond that.
''We've had a long time to think about this since 9-11,'' said Ryan. ''A lot of this news that you're seeing is not out of the blue.''
After falling 8 percent Tuesday, Boeing's stock continued its dive Wednesday, when it closed at $36.75 on the New York Stock Exchange, down 71 cents, or 1.9 percent. The stock traded a year ago at a 52-week high of $56.70.
The airline industry is reeling. US Airways filed for Chapter 11 bankruptcy protection on Sunday. Some analysts believe United Airlines, another big Boeing customer, will be next to file.
American is Boeing's largest customer, having taken delivery of 950 planes from Boeing and McDonnell Douglas, which Boeing bought in 1997.
Boeing isn't the only supplier to feel their pain. Companies like United Technologies Corp., the maker of Pratt & Whitney aircraft engines, closed down $1.12 a share at $61.35 Wednesday on the New York Stock Exchange.
Chicago-based Boeing still plans to deliver about 380 airplanes in 2002 and between 275 and 300 in 2003, Ryan said. The company also doesn't plan to go beyond the approximately 30,000 layoffs expected to be cut from the work force by the end of the year.
Ryan acknowledged the U.S. airline industry is not recovering as fast as the company had thought, and that Boeing is more optimistic about the Asian market. About 70 percent of Boeing's planes go to airlines outside the United States, he said.
More than that, aerospace manufacturers and suppliers are facing an industry that has been largely reshaped by low-cost carriers.
''Everyone has been saying the one bright spot is discount carriers, without recognizing that discount carriers are not growth. They're restructuring,'' said Richard Aboulafia, aviation director for the Teal Group. Orders from low-fare carriers come at the expense of orders from larger carriers like United he said, noting that Boeing's single biggest order in 2002 has been for 100 737s from discount carrier Ryan Air.
''Everyone's business is more and more cost-focused,'' he said.
Both Boeing and Airbus need to cut their costs super aggressively to allow them to earn a positive return on capital, said Nicholas Heymann, senior vice president for Prudential Securities. ''There's a huge squeeze coming on the suppliers,'' he said.
Boeing officials have said they think production will bottom out in mid-2003, but the latest airline problems could push that date back, said Bob Toomey, an analyst with Dain Rauscher.
But there could be a silver lining, he added: ''The positives are that finally this could push the domestic carriers to deal in a more constructive way with their structural and financial problems. Ultimately a healthier customer base is a better thing.''
The challenge for Boeing is to elbow out Airbus, Aboulafia said.
''I think Boeing needs to make it clear: Airbus is the company of engineering for engineering's sake and luxury for luxury's sake and we produce buses with wings -- good reliable solid buses with wings. This is the industry of the future,'' he said.
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