* Boeing says will increase 737 production rate to 42/mth
* New rate will begin in first half of 2014
* Boeing shares down over 1 pct
(Adds Albaugh comments from London; updates shares)
By Kyle Peterson
CHICAGO, June 15 Boeing Co (BA.N) plans to
increase the production rate on its hot-selling 737 narrowbody
plane to 42 per month, starting in 2014, the company said on
The world's second-largest plane-maker after EADS EAD.PA
unit Airbus produces 31.5 737 airplanes per month and expects
to increase to 35 per month in early 2012, 38 per month in the
second quarter of 2013, and then 42 per month in the first half
Boeing has 2,101 unfilled orders for 737 models, according
to its website. The company has taken a net total of 65 orders
for the plane this year.
Boeing is deciding whether to redesign its 737 or put a
more fuel-efficient engine in the current design. A redesign
would take longer but would save more fuel for budget-conscious
Airbus has said it would put a new engine in its competing
A320 narrow-body. Airbus expects its sales to be boosted by the
In May, the European plane-maker said it would increase
production of its best-selling A320 family of aircraft to a
record 42 planes a month, underlining signs of a global
Commercial aircraft demand is picking up as air travel
recovers and funds return to the leasing market. Soaring oil
prices, meanwhile, are forcing airlines to renew fleets with
more fuel-efficient planes.
Speaking at London's Royal Aeronautical Society on
Wednesday, Boeing Commercial Airplanes (BCA) Chief Executive
Officer Jim Albaugh said that over the next 20 years, there
will be demand for more than 33,000 new commercial planes,
valued near $4 trillion.
He said BCA is raising production rates by 40 percent in
the next three years.
"It's good to see that after the worst economic downturn
since the great depression, the commercial airplane industry is
roaring back," Albaugh said.
He said Boeing has made no decision yet on whether to
redesign or re-engine the 737, but the company has said it was
leaning toward a redesign. Albaugh said Boeing would make no
announcement of its decision at next week's Paris Air Show.
The Airbus A320 competes with Boeing's 737 for sales
estimated at $1.7 trillion over the next 20 years.
The two rival 100-200 seat aircraft are the backbone of
most airlines' medium-haul fleets and are credited with
powering the dramatic growth of low-cost carriers.
"We see this as a positive development for Boeing and the
aerospace supply chain. A potential 737 rate increase has been
widely discussed, but we had expected an announcement on 737
rates to occur later this year," said RBC Capital Markets
analyst Robert Stallard said in a research note.
"The earlier-than-anticipated decision would imply
continued robust airline demand for the plane, but also
Boeing's ability to reassure suppliers that this is a
realistic, achievable and sustainable rate increase," Stallard
Boeing's shares were down 89 cents or 1.2 percent at $73.75
in afternoon trading, as U.S. stocks fell broadly.
(Reporting by Kyle Peterson and Rhys Jones in London, editing
by Gerald E. McCormick, Maureen Bavdek and Derek Caney)