Boeing CEO sees 787 cash breakeven this decade

SEATTLE Mon Sep 26, 2011 6:26pm EDT

Jim McNerney, President and CEO of Boeing, is pictured outside the West Wing of the White House in Washington September 16, 2010. REUTERS/Jason Reed

Jim McNerney, President and CEO of Boeing, is pictured outside the West Wing of the White House in Washington September 16, 2010.

Credit: Reuters/Jason Reed

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SEATTLE (Reuters) - Boeing Co (BA.N) expects to reach "cash breakeven" on each 787 Dreamliner this decade, Chairman and Chief Executive Jim McNerney said on Monday.

"In the way these planes are accounted for, we will be profitable from day one," McNerney told reporters, referring to Boeing's program accounting system, which spreads costs over several years.

But it will be some years before the program is cash-positive, he explained.

"We have a program accounting method which matches cost and revenues and you may be asking the question when does the cash breakeven happen, and that is a number of years out ahead of us, but not as late as you have just mentioned," he said when asked about suggestions the 787 would burn cash into the 2020s.

Asked whether this second type of breakeven point would be this decade, he said, "Oh yes".

Boeing typically talks about cash on a unit-cost basis, measuring whether more cash comes in than goes out for each unit delivered, a Boeing spokesman said by email. McNerney was talking about the cash breakeven point on this unit cost basis, rather than a cumulative basis, he added.

McNerney said Boeing was confident in its ability to ramp up production from two a month now to 10 a month by the end of 2013.

Speaking in front of a partly assembled 787 being built for Air India, he also said Boeing was confident in the performance of the global supply chain after a spate of earlier problems.

Asked about the impact of defense spending cuts, he said he expected business pressure but no quick push for consolidation.

"I don't see consolidation coming from the current downturn, I do see business pressure on all of us in the industry. I think if there is any tendency it will be vertical consolidation not horizontal consolidation, but we have a lot of work to do to be ready for the flattening out of the defense budget that will be inevitable."

(Editing by Bernard Orr)

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