Boeing says 777 output may fall as losses narrow on 787
By Alwyn Scott
(Reuters) - Boeing Co (BA.N: Quote) posted better-than-expected quarterly results and lifted its financial outlook on Wednesday, but signaled it may juggle plane production to keep profits flowing as one of its two main cash cows dries up.
Boeing said it could cut production by as much as 15 percent on its 777 long-range, widebody jetliner, one of its most profitable planes and a key source of cash.
The talk of a possible slowdown to as few as seven a month from the current 8.3 came as Boeing posted narrower losses on its 787 Dreamliner and voiced confidence in that plane's ability to generate cash and fill the gap.
The world's largest plane maker said it also is still considering an increase in production of the single-aisle 737, its other main cash cow, despite concerns from engine maker CFM International, a joint venture between General Electric Co (GE.N: Quote) and Safran SA (SAF.PA: Quote) of France, about meeting those rising rates.
Taken together, the moves would cushion the blow of what had already appeared to be an inevitable 777 production cut as Boeing shifts to a newer model, the 777X, in 2020, because it has failed to sell out all of the remaining production slots.
The cut grew more likely last week when the head of Delta Air Lines Inc (DAL.N: Quote) said prices for used 777s were falling, a comment seen undercutting new plane sales.
Boeing has a lot of 777s to sell before switching to the 777X, said RBC analyst Rob Stallard. "Delta has got the word out there that pricing is soft and that has not made Boeing’s life easier."
Boeing Chief Executive Dennis Muilenburg stressed on a conference call that 777 production is "essentially" sold out through 2016 and more than half of 2017. "The value of the 777 is holding up very well," he said. Continued...