Boeing to play catch-up

STRATEGY   BOEING   AIRLINE

Global - Boeing has announced its decision to continue working on its backlog of 737 airplane orders for the next 5 years, while aiming to make the best aircraft available instead of merely focusing on producing it.  

Its plan to reduce its seven-year waiting list for its 737s came after its warning that the market may be flooded with an excessive number of aircraft, Reuters reported.

Boeing's head of flagship commercial subsidiary Jim Albaugh commented there were no intentions to further increase the production of airplanes beyond the current target of 42 planes a month.

"We have been very careful not to flood the market with 737s and when you talk to the leasing community the leasing costs of 737s have held up very well compared to the A320," Albaugh said.

The manufacturing costs for popular models have created a huge impact on the secondhand value.

Some leasing firms are accusing plane makers of overproduction, where it would reduce their assets and monthly lease rates.

Boeing is considering an interim goal of 44 planes a month by Renton, according to Albaugh.

"What I want to do is burn the backlog down because when you tell a customer you can't deliver an airplane for another five, six, or seven years you drive the customer to go and buy someone else's airplane. So it's not just about having the best airplane, you have got to have the best airplane available," Albaugh added.

Boeing may also speed up the production for all 2,000 orders of 737s in its backlog, a move it believed as a sales benefit.

There has been an increase in aircraft production spurred by growing demand from Asia and the Middle East, despite economic problems from the West.

"Even if there is a slump (in Asia), with over seven years of backlog we need to burn that down. And if there is a slowdown in orders I want to take the opportunity to do burn that down, not take that opportunity to slow down production," Albaugh said.

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