Dreamliner to fly in late Dec-2009, more job cuts to come for Boeing - Suppliers Share Wrap
Boeing shares traded down 1.3% yesterday, along with a generally negative market, which saw EADS down 3.3% and Embraer fall 3.0%. Aircraft lessors were also affected, with Genesis Lease (-3.7%) and Aercap (-3.8%) also down strongly.
Dow Jones News Wire reported yesterday that the long delayed 787 is now scheduled to conduct its maiden test flight on or about 22-Dec-2009, citing an unnamed source. Boeing’s B747-8, also suffering from multiple delays, is not due to fly until 1Q2010.
Boeing Chairman & CEO, Jim McNerny, in an interview with Emirates Business 24/7, also confirmed that the manufacturer would enact further job cuts in 2010. The US manufacturer reduced its workforce by around 8,000 positions this year, with another 2,000 to come in 1Q2010. More job losses will follow, in addition to the first quarter cuts, but they will not be of a similar magnitude to the reductions in 2009.
Much of the cuts will come in the manufacturer’s military division, which accounts for approximately 45-50% of annual revenue, due to revisions to the US military budget under the new Obama Administration.
At the same time, Boeing will be ramping up production for both the B787 and the B747-8, both of which are due to be delivered to their launch customers at the end of next year. While early B787 production will be at its home in Everett, Washington State, Boeing recently decided to locate the second B787 assembly line in South Carolina, the first time it has shifted production away from Washington State.
Aircraft deliveries in 2010 are currently expected to match 2009 levels, which will total approximately 480 aircraft. However, the outlook for aircraft production is less than certain, with Airbus and some major suppliers suggesting that narrowbody output could be reduced from 2010. Boeing doesn’t expect aircraft ordering to recover until 2012.
According to Ascend, the current economic downturn has hit narrowbody values worse than the post-September 11th downturn, although some widebody lease rates show “exceptional over-performance”. Both Airbus and Boeing currently manufacture more than 30 narrowbodies per month.
Selected Aviation suppliers’ daily share price movements (% change): 19-Nov-09