Boeing may speed up 787 production

Thursday, October 20, 2005

Boeing may speed up 787 production
Exec says 'demand is high' with early deliveries sought

By MASUMI SUGA
BLOOMBERG NEWS

The Boeing Co. may increase the rate it makes the new 787 Dreamliner to meet rising demand for the fuel-efficient aircraft, a company executive said Wednesday.

"We are evaluating the optimal level to increase production to," Wade Cornelius, Boeing's vice president in charge of global strategy on commercial aircraft division, said in Tokyo. "Demand is extremely high. There are many customers who'd like to have early deliveries."

With oil prices high, demand has surged for fuel-saving planes such as the 787, which will use 20 percent less fuel than similar-sized aircraft. Boeing is counting on the 787 to recoup market share from Airbus, which surpassed the company in deliveries in 2003. The new plane is scheduled to enter service in 2008.

Boeing now forecasts the production rate for 787 models at seven aircraft a month, Cornelius said, declining to say how much more the plane maker can bolster production.

Boeing has announced orders and commitments for 293 planes, including the latest order for 20 aircraft worth $2.5 billion from an unidentified customer.

The order was booked last week, said Michael Tull, a spokesman for Chicago-based Boeing. He declined Wednesday to identify the buyer. The Wall Street Journal reported Wednesday that the customer is International Lease Finance Corp., citing people familiar with the purchase whom it didn't name.

In Japan, Boeing has won a combined firm order for 80 787s from Japan Airlines Corp. and All Nippon Airways Co., the country's two largest carriers, extending its dominance over Airbus in the country. About 35 percent of contracts for the 787, including work for wings and fuselage, were awarded to Japanese manufacturers, including Mitsubishi Heavy Industries Ltd. and Kawasaki Heavy Industries Ltd.

International Lease Chairman Steven Udvar-Hazy said while visiting an Airbus factory in January that the leasing company was in talks to buy the 787 as well as Airbus planes. Price was the sticking point in the negotiations, Udvar-Hazy said at the Paris Air Show in June.

The 787 is scheduled to go into service in 2008. The plane has a list price of between $125 million and $135 million, according to Boeing.

Airbus won approval from shareholders earlier this month for a $5.7 billion project to build the A350 aircraft, which would compete with the Dreamliner. The A350 will feature the same fuel-saving engines being used on the 787. The plane isn't expected to enter service until 2010. It has a list price of $159 million to $165 million.

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