Boeing to adjust production plans

Global - Boeing said it will adjust its twin-aisle airplane production plans for next year, due to a harsh business environment for airlines and cargo operators.

Starting from June 2010, monthly production of the 777 model will drop from seven to five airplanes. Boeing will be delaying previous plans to increase 747-8 and 767 productions, while no changes have yet been announced to the 737 production rate.

Additionally, the airplane maker said the global recession has contributed to significant declines in the escalation indices that affect forecast pricing for commercial airplanes ordered in advance.

"These are extremely difficult economic times for our customers... It's necessary to adjust our production plans to align supply with these tough market conditions," said Scott Carson president and CEO of Boeing Commercial Airplanes.

However, Boeing said the change in production rate solely reflects delivery deferrals requested by customers, in response to a fall in global passenger and air cargo volumes, as no 767, 747 or 777 orders for 2009 have been cancelled to date.

As the 747 program is currently making a loss, Boeing said the reduced earnings will be recorded for most units in the 747 backlog.

The production decisions coupled with the unfavourable price escalation are expected to reduce Boeing's first-quarter 2009 net earnings.

The company will update its 2009 guidance when it reports first-quarter results on 22 April.