All of us are going to feel this

  • Bryan Corliss / Herald Writer
  • Thursday, September 20, 2001 9:00pm
  • Business

By Bryan Corliss

Herald Writer

SEATTLE — Several of the Boeing Co.’s airline customers could be bankrupt "within a couple of days," Boeing Commercial Airplanes President and Chief Executive Alan Mulally said Thursday.

That’s bad news for Boeing and its workers, because the company’s layoff plans are based on the assumption that the airlines will remain financially viable, Mulally said. If they don’t, "It could get worse," he said.

Mulally was the keynote speaker at the Greater Seattle Chamber of Commerce’s annual meeting Thursday. The event was scheduled months before the Sept. 11 terrorist attack and the subsequent crisis in the airline industry that has prompted Boeing to announce plans to lay off 20,000 to 30,000 workers by the end of 2002.

Boeing has stopped hiring people to build passenger jets and is working on a plan to scale down production, Mulally said.

After that plan is in place, sometime in the next "couple of weeks," layoff notices will start going out, Mulally said. In the meantime, the workforce will shrink through natural attrition and retirement.

Mulally said the company is "going to do everything we can to do the right thing" for laid-off employees and their communities. He again denied critics’ claims that Boeing is using the current crisis as a pretext to slash Puget Sound area employment.

"Nobody runs a business that way," Mulally said. "The economy was slowing, but we were going to deal with that."

Boeing will be "very fortunate" even to hit its scaled-down target of 500 deliveries this year, Mulally said. Before the crisis, the company had planned to deliver 538 jets.

Boeing is working with banks and aircraft leasing companies to help arrange better financing for the airlines. The relatively new Boeing Capital Corp. could end up being the owner of a number of those planes, which it would then lease to airlines, he said.

But chances are, Boeing will end up building planes this year that the airlines can’t use, Mulally said. Those planes, perhaps 38 of them, would go into storage.

Without an upturn in air travel, the situation for the next few years will get worse, Mulally said. Boeing projects deliveries will drop to the "low 400s" in 2002, and production could fall even lower in 2003.

"If there’s no growth (in air travel), 70 percent of all the airplanes being produced by Boeing and Airbus are not needed," Mulally said.

But advanced ticket booking is down by 40 percent since the attacks, and airlines are flying planes that only are 30 percent full, he said.

That underscores the urgent need for the industry and federal government to work together on a plan to restore confidence in the air travel system, and for the government to take steps to stabilize airline finances, Mulally said.

"The most important thing is the liquidity of the airlines right now," he said.

He asked Seattle’s business leaders to maintain "an attitude of dealing with the situation."

"Everybody in this room is associated with Boeing, one way or another," Mulally said. "All of us are going to feel this."

You can call Herald Writer Bryan Corliss at 425-339-3454

or send e-mail to corliss@heraldnet.com.

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