| NEW YORK
NEW YORK Oct 18 Boeing Co said on Friday
it was notching down the production rate of its biggest plane,
the iconic bubble-top 747, due to slack demand.
The slowdown won't affect financial forecasts for Boeing,
analysts said, because production of the jet is so limited. Only
about 50 planes, with a list price of $357 million, are
currently on order. Analysts expect Boeing to report solid
third-quarter results on Wednesday, and many predict its stock,
currently at record levels, will continue climbing.
The rate reduction reflects declining use of the 747 and to
a lesser extent its newer rival, the Airbus A380
superjumbo. Rather than flying those large four-engine jets,
many airlines prefer to fly slightly smaller twin-engine planes
that are easier to fill and burn less fuel.
The decision also reflects Boeing's prescience in deciding
to build the 787 a decade ago. While Airbus developed the
double-decker A380, which carries 525 people in some
configurations, Boeing correctly predicted that airlines would
want long-range, twin-engine planes that can fly direct, point
to point routes, rather than carrying passengers through hubs
where they would have to change planes.
"The A380 has more life since it is much newer," said Ken
Herbert, an analyst at Canaccord Genuity Inc. But with the
twin-engine Airbus A350-1000 and Boeing 777X jets coming out,
"the days of the quad engine are numbered, in my view."
Boeing focused on building the 250-seat 787, and extending
its best-selling 777 to fly farther and carry about 368
passengers. Airbus is due to deliver the first of its A350
family, which will eventually carry up to 350 passengers,
starting next year.
The 747-8 carries 467 passengers in a typical configuration,
and the company said it continues to invest in the plane, which
has engine technology derived from the 787.
But sales have been slow. Only 107 of the 747-8 model have
sold, and 56 have been delivered. So far this year, Boeing has
received just five orders for the 747-8. Five older orders were
canceled, however, leaving no new orders. The biggest buyer of
the passenger version is Deutsche Lufthansa AG, with
The jet's use as a freighter also has been limited by weak
cargo demand, although Boeing said it expects that market to
recover next year.
Nippon Cargo Airlines Co, Cathay Pacific Airways Ltd
and Cargolux Airlines International, are the
biggest buyers of the freight version, with more than a dozen
Peter Arment, an analyst at brokerage firm Stern Agee, said
the 747-8 freighter will probably continue to sell over the long
term. "But the introduction of the 777X will likely seal the
fate of the 747-8 passenger version by the end of this decade,"
Boeing continues to develop upgrades for the 747-8 to
improve its reliability and performance. The jet was originally
introduced in 1970, and revolutionized travel with its ability
to fly large numbers of people over a long range without
Boeing said it expects the world will need about 760 large
aircraft in the 747-8 size category over the next 20 years,
worth about $280 billion.
"This production adjustment better aligns us with near-term
demand," Eric Lindblad, Boeing's 747 program manager, said in a
statement. But, he added, it "doesn't change our confidence in
the 747-8 or our commitment to the program."
Boeing said that it will change the production rate soon to
1.5 a month, down from 1.75 a month currently. It didn't
disclose a date for the change, but said the first jet at the
new rate would be delivered in early 2014.
The slowdown will continue through 2015, the company said,
by which time it expects the demand for the jet to increase.