Boeing Commercial Airplanes is slowing production of some of its wide-body jets in response to the global recession that has caused carriers to shrink their fleets or slow their growth plans.
The Chicago-based company said Thursday that it will trim production of its popular 777 international-range jet to five a month, down from the current seven, starting in June of next year. It also is delaying plans to speed production of both its intermediate twin-aisle 767 and jumbo 747-8.
The announcement came although Boeing ba executives had maintained previously that their huge backlog of nearly 3,700 planes on order and their experience in managing through down cycles would keep the company's assembly lines humming for years.
But the company has been hit by lower orders for planes this year as air travel has waned. In response, airlines have cut flights, and some have delayed orders and deliveries of new jets.
"These are extremely difficult economic times for our customers," Scott Carson, Boeing Commercial Airplanes chief executive, said in a statement. "It's necessary to adjust our production plans to align supply with these tough market conditions."
The lower production rate and weaker-than-expected prices will cut Boeing's first-quarter profits by about 38 cents per share, the company said. It expects to report its first-quarter results on April 22.
Boeing's wide-body planes are assembled in Everett, Wash. Its single-aisle 737, the world's most popular commercial aircraft, is assembled in Renton, Wash.
Boeing Commercial, the company division that makes jetliners, laid off 4,500 workers, mostly in Washington, earlier this year in expectation of slower sales and some deferrals and cancellations.
No further job cuts were announced Thursday.
In the first two months of this year, Boeing sold 22 new planes, down from 195 in the same period last year. Worse, Boeing saw 32 orders for its new 787 Dreamliner canceled in February. And the roughly $1.75 billion that Boeing will get from the new model 737 and 777 planes it sold in January and February won't come close to offsetting the nearly $5.5 billion it's losing from the cancellation of the 787s. Each 787 is priced around $170 million.