Local Effects On Boeing Production Cuts

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Friday, April 10, 2009

Sluggish demand for Boeing-built planes will eventually catch up with its production rates. The question is, how will these cuts affect work in Wichita?

So far, only Spirit AeroSystems has been able to avoid layoffs, but Boeing production cuts could soon change that fact.

Boeing President Scott Carson says these are extremely difficult times for Boeing’s customers. Airlines are suffering with fewer passengers flying, resulting in fewer plane orders and even deferrals and cancellations of existing orders.

Boeing will cut their 777 production rates from seven per month to five starting in June 2010. They will also be delaying production increases on the 747-8 and the 767. Only the 737 production rates will be left unchanged for now.

Spirit does more work on the 737 than any other single airplane and analysts believe rate cuts will eventually hit the 737 line.

“It’s pretty clear, if anything, the production rate cuts will be even harsher for t 737 because domestic airline traffic is even weaker than international airline traffic,” said Richard Aboulafia, Aviation Analyst with the Teal Group.

Spirit has been on a hiring freeze except for critical areas since last fall to try to keep costs down. Other Wichita suppliers have already slowed work down to accommodate Boeing.

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