777, 747 rate cuts could affect Boeing employment in Everett

The Boeing Co.’s decision to make fewer of its two biggest airplanes by early 2017 could mean fewer jobs at the company’s Everett plant, a spokesman confirmed on Wednesday.

The company has said it plans to cut production rates for the 747 this year and for the 777 by early next year.

“As a result of the rate change, we expect some impact on employment and will do our best to mitigate that by placing employees in other jobs across Boeing. We are still studying how many roles may be impacted,” spokesman Doug Alder said after company leaders in Chicago confirmed the rate cuts.

The aerospace giant has said it “will do our best” to soften the blow of production rate cuts for the 747 and the 777. Earlier this month, Boeing announced plans to cut the 747 production rate to six planes a year by September.

During a conference call Wednesday for investment analysts and reporters, company leaders confirmed plans to reduce 777 production to seven planes a month — 84 airplanes a year — by early 2017 as part of a transition to production of the company’s revamped 777X. That will be 16 fewer 777s per year than the current rate.

The company on Wednesday also announced fourth-quarter and year-end results for 2015 and revised its projection for 2016.

The plane maker said profit this year would miss analysts’ estimates by more than a dollar per share as it delivers fewer jetliners in 2016.

Boeing shares plummeted on the news by 8.9 percent, closing at $116.56 on the New York Stock Exchange.

Technical issues interrupted the quarterly conference call during which executives discuss company performance. They resumed the presentation later.

Before the earlier call ended, Boeing leaders also confirmed plans to increase 737 production to 57 airplanes a month in 2019. The company assembles 42 a month now. It will increase the assembly rate to 47 in 2017 and 52 a month in 2018.

Company spokesman Alder declined to comment on how specific rate increases are expected to affect employment on the 737 program. The single-aisle airplanes are assembled at Boeing’s Renton plant, and overhead bins and other components for the interior are made in Everett.

“Generally speaking, increased rates require some level of increased employment,” Alder said after technical problems interrupted the earnings call.

“The planned rates and market demand mean that we see consistent levels of work for Boeing employees building the 737 in Renton for the foreseeable future,” he said.

Adjusted 2016 profit will probably be $8.15 to $8.35 a share this year, the company said Wednesday in its earnings statement. That compared with an average prediction of $9.42, according to 22 analyst estimates compiled by Bloomberg News. Boeing’s sales forecast of between $93 billion and $95 billion fell short of analysts’ projections of $97.3 billion.

Boeing expects to deliver between 740 and 745 jetliners this year, a decline from a record 762 in 2015. Plane makers typically receive the bulk of payment for aircraft when they are delivered to customers.

Looking back, Boeing reported fourth-quarter 2015 profit of $1.03 billion.

On a per-share basis, the Chicago-based company said it had net income of $1.51. Earnings, adjusted for non-recurring costs, were $1.60 per share.

Those results surpassed Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of $1.37 per share.

The airplane builder posted revenue of $23.57 billion in the fourth quarter, which also topped forecasts. Five analysts surveyed by Zacks expected $23.4 billion.

Boeing expects full-year 2015 earnings in the range of $8.15 to $8.35 per share, with revenue in the range of $93 billion to $95 billion.

Boeing shares have fallen 11 percent since the beginning of the year, while the Standard &Poor’s 500 index has declined almost 7 percent. The stock has declined 4.5 percent in the past 12 months.

Bloomberg News and The Associated Press contributed.

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