No slowdown anytime soon for Boeing

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by GLENN FARLEY / KING 5 News Aviation Specialist

Bio | Email | Follow: @GlennFarley

KING5.com

Posted on May 15, 2012 at 12:13 PM

Updated Tuesday, May 15 at 5:36 PM

The numbers coming out of Boeing these days are simply dizzying. At the company's annual investor conference today in St. Louis, Mo., Boeing CEO Jim McNerney and commercial airplanes chief Jim Albaugh spoke of manufacturing slowdowns as minor and, more importantly for the Puget Sound region, fairly far into the future.

For now, the company seems to be more concerned about finding enough room to build all the planes airlines want.

Consider the following numbers: In 2008, Boeing's backlog of unbuilt aircraft stood at a staggering 3,714 airplanes. It dipped to 3,375 in 2009, but has been climbing back ever since.

Today, the backlog stands at a record 4,046. In dollar terms, that is $308 billion worth of jets.

Boeing reached that record backlog even though it's building planes faster than ever (and has eight more production rate increases planned). How much work does that represent? Albaugh said it would take seven years to bring the backlog to zero ... if airlines stopped ordering new planes today.

Today's meeting in St. Louis is mainly for the benefit of investment professionals. One of those attendees asked the executives if the backlog is too much of a good thing?

"We have not seen any evidence that we have a production bubble,"  Albaugh said.

What's helping drive the business is high oil prices. Airlines, which are finally making profits again, are lining up to buy more fuel-efficient jets, anxious to put their aging fleets of gas hogs out to pasture.

The 737-MAX now in development has 500 firm orders and just as many other commitments because it promises 13 percent fuel savings over the current 737, which already has a good reputation for fuel economy.  

Albaugh repeated his view that the 737 factory in Renton could end up making more than the record 42 jets a month that it's expected to hit in early 2014.

There is also concern whether Boeing has enough room at its manufacturing facilities to build more jets at a faster pace.

"Are we going to have the space to accommodate all the production that we have?" Albaugh asked rhetorically. He said "lean manufacturing" techniques will allow more planes to be built in the same amount of space.

His example involved the large twin aisle 777, which the company says could now break through its planned production rate cap of 8.3 planes a month. Will that rate hit nine or ten planes per month? The executives said those numbers are not out of the question if the demand continues.  In 2011, airlines ordered a record 200 777s.  

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