Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
737 Production Reduction Of 32%  
User currently offlineObserver From United States of America, joined Jun 2007, 78 posts, RR: 0
Posted (5 years 5 months 1 week 1 day 12 hours ago) and read 3602 times:

Holy cow, a supplier to Boeing says it's already planning on a 32% reduction in 737 production by the end of this year.

http://leehamnews.wordpress.com/2009...boeing-supplier-plans-32-rate-cut/

19 replies: All unread, jump to last
 
User currently offlineEBJ1248650 From United States of America, joined Jun 2005, 1932 posts, RR: 1
Reply 1, posted (5 years 5 months 1 week 1 day 3 hours ago) and read 3385 times:

As good as the 737 sells and as much backlog as there is, I don't know that I'd take this too seriously.


Dare to dream; dream big!
User currently offlineStitch From United States of America, joined Jul 2005, 30651 posts, RR: 84
Reply 2, posted (5 years 5 months 1 week 18 hours ago) and read 3067 times:
Support Airliners.net - become a First Class Member!

Scott Hamilton is on record stating that he believes in May Boeing will announce a production -rate reduction (though he did not give estimates). One-third sounds extreme, but then Boeing halved production after September 11, 2001. And traffic numbers are falling not just between markets, but also within markets, as well. So narrowbodies should logically be just as much at risk as widebodies.

User currently offline2175301 From United States of America, joined May 2007, 1037 posts, RR: 0
Reply 3, posted (5 years 5 months 1 week 15 hours ago) and read 2921 times:

On a report I ran last Sunday (Feb 22) Boeing had 2263 Unfilled orders for the 737.

That's about a 6.9 year backlog assuming that they ran their 2 production lines at Renton at full capacity (i.e. 2007 production rate of 330 per year).

I also note that Boeing is still getting orders for the 737; and again as of last Sunday the 737 was the only Boeing model with new orders in 2009.

I seriously doubt that Boeing will be cutting production on the 737 for a couple of years; even if a bunch of orders were to vanish. I personally estimate that in general Boeing will only see about 10% of their orders canceled. I could be wrong, but I don't think it will be anything like 32%.


User currently offlineWestWing From United States of America, joined Feb 2005, 2134 posts, RR: 7
Reply 4, posted (5 years 5 months 1 week 15 hours ago) and read 2826 times:

Boeing's customers are presumably trying to defer their orders because of the current downturn in traffic. So with the deferments if it turns out that Boeing's customers are only willing to accept (say) 700 737s over the next three years instead of 1000, then Boeing would have little choice but to cut production rates irrespective of the overall size of the backlog.


The best time to plant a tree is 40 years ago. The second best time is today.
User currently offlineSocalfive From , joined Dec 1969, posts, RR:
Reply 5, posted (5 years 5 months 1 week 14 hours ago) and read 2809 times:

It's my bet that even with production cuts there could very well be completed planes sitting in storage at the end of the year due to late cancellations or failures to finance. We're a VERY long way from the bottom of this economic cycle.

User currently offlineObserver From United States of America, joined Jun 2007, 78 posts, RR: 0
Reply 6, posted (5 years 5 months 1 week 12 hours ago) and read 2713 times:



Quoting Stitch (Reply 2):
Scott Hamilton is on record stating that he believes in May Boeing will announce a production -rate reduction (though he did not give estimates).

Actually Hamilton quoted Scott Carson speaking at an investors conference--Carson said the production decision will come in May and Boeing was looking at a 10% overall reduction in 2010. The Curtiss Wright transcript says their forecast is a 32% 737 reduction by year end 2009 beginning in the second half.


User currently offlineSxf24 From United States of America, joined Aug 2007, 1257 posts, RR: 0
Reply 7, posted (5 years 5 months 1 week 12 hours ago) and read 2712 times:



Quoting Observer (Reply 6):
Curtiss Wright transcript says their forecast is a 32% 737 reduction by year end 2009 beginning in the second half.

For some reason, Spirit doesn't agree. They just filed their 10-K and, as the largest 737 supplier, you'd think they'd give some indication of a rate reduction if one was expected.


User currently offlineScbriml From United Kingdom, joined Jul 2003, 12406 posts, RR: 46
Reply 8, posted (5 years 5 months 1 week 4 hours ago) and read 2498 times:
Support Airliners.net - become a First Class Member!



Quoting 2175301 (Reply 3):
I seriously doubt that Boeing will be cutting production on the 737 for a couple of years

While a huge backlog should be of some comfort to both manufacturers, if the airlines that ordered those planes are currently losing $billions and are struggling to get credit, there will potentially be lots of deferments and outright cancellations. To continue to build planes "flat-out" in such an environment could end up being very expensive.

Both manufacturers will be busy talking with the airlines due to receive planes over the next 12-18-24 months and trying to match their productions rates to the numbers the airlines say they'll realistically take. Airbus has already announced that planned production rate increases will not now be implemented.



Time flies like an arrow, but fruit flies like a banana!
User currently offlineLightsaber From United States of America, joined Jan 2005, 12907 posts, RR: 100
Reply 9, posted (5 years 5 months 6 days 20 hours ago) and read 2270 times:
Support Airliners.net - become a First Class Member!

I expect some cut in 737 production. But how much? Certainly not 9/11 levels. But 10% wouldn't be extreme. At this point, defferals should be expected.

Quoting Observer (Reply 6):
The Curtiss Wright transcript says their forecast is a 32% 737 reduction by year end 2009 beginning in the second half.

Wow. I wonder where they are getting their numbers.

Side Topic: It amazes me how Curtiss Wright went from being a major integrator to a component/assembly vendor after the Helldiver initial fiasco. They never seemed to recover from that.

Quoting Scbriml (Reply 8):
Airbus has already announced that planned production rate increases will not now be implemented.

 checkmark  So now we'll see how the Boeing customers are doing.


Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineRheinbote From Germany, joined May 2006, 1968 posts, RR: 52
Reply 10, posted (5 years 5 months 6 days 20 hours ago) and read 2223 times:



Quoting Sxf24 (Reply 7):
For some reason, Spirit doesn't agree. They just filed their 10-K and, as the largest 737 supplier, you'd think they'd give some indication of a rate reduction if one was expected.

That's a very good point. Especially as Spirit in my book has a track record of being forthright in these matters.


User currently offlineFlypba From United States of America, joined Feb 2007, 431 posts, RR: 0
Reply 11, posted (5 years 5 months 6 days 19 hours ago) and read 2132 times:

Boeing: Still no production cuts planned

I asked Boeing about it this morning.

"Our delivery guidance remains the same: 480 to 485 (jet) deliveries this year," said Vicki Ray, Boeing spokeswoman. The company has "nothing planned" in terms of slowing down rates later this year.


http://www.heraldnet.com/article/200....Still.no.production.cuts.planned.


User currently offline2175301 From United States of America, joined May 2007, 1037 posts, RR: 0
Reply 12, posted (5 years 5 months 6 days 16 hours ago) and read 2032 times:



Quoting WestWing (Reply 4):
Boeing's customers are presumably trying to defer their orders because of the current downturn in traffic. So with the deferments if it turns out that Boeing's customers are only willing to accept (say) 700 737s over the next three years instead of 1000, then Boeing would have little choice but to cut production rates irrespective of the overall size of the backlog.



Quoting Scbriml (Reply 8):
While a huge backlog should be of some comfort to both manufacturers, if the airlines that ordered those planes are currently losing $billions and are struggling to get credit, there will potentially be lots of deferments and outright cancellations. To continue to build planes "flat-out" in such an environment could end up being very expensive.

I think both of you miss several important factors at work anytime a company has a very long backlog.... The first is the fact that a number of customers would love to get their orders earlier.

So, let's assume that 1/2 of all the customers that were slotted to get Boeing 737s in mid 2009 - mid 2010 wish to defer - or even cancle the order. Those production slots will be filled by customers from the 5 years of backlog behind them. I am quite sure that even with substaintial deferral and cancelations that Boeing can keep the 737 line humming by pulling forward other customers for at least two years.

The second factor is that perhaps airlines will be deciding that the market will not support their wide body orders as it does not appear that their will be enough passengers on some of the routes to support a wide-body. Yet, they still need something as their existing planes are not really a good match either (or nearing the end of their life). What do they buy? Narrow-bodies.

I think the 737 line is set for a while.

Some of the other lines may see some slowdown. The 767 and 747 are obvious canidates (and what I think was a planned speed up of the 747 & 767 lines may not happen).

The 777 line currently has about a 4 year backlog that cannot really be improved much upon (the line is at its maximum capacity). It will be interesting to see what happens their.


User currently offlineMoman From United States of America, joined Aug 2004, 1054 posts, RR: 4
Reply 13, posted (5 years 5 months 6 days 15 hours ago) and read 1992 times:

It doesn't matter how many orders they have on the books, what matters is who is ready and willing to accept delivery of the aircraft at the time.

I highly doubt that any airline is willing to take early production slots. The best example I can think of is American, which is taking 3 737 per month for the rest of this year. Do you think they are willing to take 5 or 6 per month, or even the 36 aircraft planned for this year tomorrow?

I don't.



AA Platinum Member - American Airlines Forever
User currently offlineStitch From United States of America, joined Jul 2005, 30651 posts, RR: 84
Reply 14, posted (5 years 5 months 6 days 15 hours ago) and read 1963 times:
Support Airliners.net - become a First Class Member!



Quoting Moman (Reply 13):
I highly doubt that any airline is willing to take early production slots.

There are airlines who will be in a position to retire older, less efficient models to reduce operating costs.

There are airlines who will use new capacity to steal marketshare from competitors who have downsized too much.

There are airlines who will see growth on some routes and will want additional capacity to meet it.

I am sure there are other reasons for airlines to want planes now. The world is a pretty big place, after all...


User currently offlineLightsaber From United States of America, joined Jan 2005, 12907 posts, RR: 100
Reply 15, posted (5 years 5 months 6 days 12 hours ago) and read 1878 times:
Support Airliners.net - become a First Class Member!



Quoting Moman (Reply 13):
The best example I can think of is American, which is taking 3 737 per month for the rest of this year. Do you think they are willing to take 5 or 6 per month, or even the 36 aircraft planned for this year tomorrow?

Actually, with the right financing, I would expect AA to be willing to accelerate 738 delivery. Not infinitely quick, but at a rate to keep MD-80's out of D-checks.

Quoting Stitch (Reply 14):
There are airlines who will be in a position to retire older, less efficient models to reduce operating costs.

There are airlines who will use new capacity to steal marketshare from competitors who have downsized too much.

Both good reasons for certain airlines to expand. I expect the need to retire less efficient aircraft is slowed thanks to cheap oil. But not halted. Hence why I think AA would like to accelerate 738 delivery, but I would also expect some aircraft to be just parked.

But some airlines will use the recession to gain market share. That is a gutsy move. The question is, which ones will do so wisely?

I still expect to see some line slowdowns. Again, 10% seems about right to me. For the 777 too.  Sad

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineSxf24 From United States of America, joined Aug 2007, 1257 posts, RR: 0
Reply 16, posted (5 years 5 months 6 days 12 hours ago) and read 1864 times:



Quoting Lightsaber (Reply 15):
I still expect to see some line slowdowns. Again, 10% seems about right to me. For the 777 too.

I agree. Though, for both lines, I imagine the decision hinges on a few key customers (AA, WN, FR, EK).


User currently offlineIkramerica From United States of America, joined May 2005, 21478 posts, RR: 60
Reply 17, posted (5 years 5 months 6 days 11 hours ago) and read 1844 times:

This may just be confusion about what it means to cut 32%. To cut 32% by year end can mean that in December, the monthly rate will be 68% of what it is now, not that they will produce 32% fewer planes this year.

If they don't cut at all through May, and taper down to 65% - 70% by Dec 31, that would be 100%(1/3) + 84%x(2/3) = 89.5% production for the year, which corresponds nicely to the 10% reduction figure.

If they believe 2010 will reverse that trend and they would be back up to full production by the end of the year, that would be 10-15% cut for that year too.



Of all the things to worry about... the Wookie has no pants.
User currently offlineBurkhard From Germany, joined Nov 2006, 4387 posts, RR: 2
Reply 18, posted (5 years 5 months 6 days 9 hours ago) and read 1774 times:



Quoting Lightsaber (Reply 15):
But some airlines will use the recession to gain market share. That is a gutsy move. The question is, which ones will do so wisely?

LH setting up Milan as a new hub is an example. OK, there are more reasons to it, but it is partly due to the fact they can pay in cash what others don't find a bank to finance it.


User currently offlineF9Animal From United States of America, joined Dec 2004, 5001 posts, RR: 28
Reply 19, posted (5 years 5 months 6 days 9 hours ago) and read 1747 times:



Quoting Moman (Reply 13):
I highly doubt that any airline is willing to take early production slots. The best example I can think of is American, which is taking 3 737 per month for the rest of this year. Do you think they are willing to take 5 or 6 per month, or even the 36 aircraft planned for this year tomorrow?

I don't.

Actually, I think AA would argue with you about wanting more than 3 per month. Are they not going to replace the mad dogs eventually?



I Am A Different Animal!!
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
737 Production Line Is Temporarily Shut Down.. posted Tue Nov 4 2008 11:53:44 by Bahadir
Reduction Of Flights To Venezuela For US Airlines posted Mon Oct 27 2008 22:09:03 by Mariodgf
What Will WN Do After The 737 Production Ends? posted Thu Jan 10 2008 15:45:41 by Jetblueguy22
Boeing 737-900ER: Future Of Boeing 737? posted Mon Jul 9 2007 00:35:44 by Dsa
Has Reduction Of IB's BCN Hub Begun? posted Sat Feb 3 2007 16:51:17 by TriStar500
The Production Method Of A Burst Line posted Sat Aug 26 2006 00:56:08 by Kaitak744
OS Considers Closing/reduction Of MEL + SYD posted Wed Jul 19 2006 10:02:53 by Macc
Production Lists Of Turboprops, Cessnas & Co.? posted Wed Sep 7 2005 22:13:38 by Fraport
CO EWR-LIM Reduction Of Frequencies posted Fri Sep 2 2005 18:51:13 by AirafriqueDKR
Production Rate Of EMB-145 posted Wed May 11 2005 19:01:12 by Aleksandar