CHICAGO — Boeing Co. Chairman Phil Condit said Tuesday that despite the severe downtown in the airline industry and a likely decline in aircraft orders, he expects the aerospace giant to remain profitable.
Condit said his optimism is based on a strategy begun in 1996 to transform Boeing from a company with 80 percent of its business in commercial aircraft to one with better balance that includes military aircraft, space and communications components.
Briefing reporters prior to a speech to the Commerce Club of Chicago, Condit said the company’s goal is to run healthy core businesses and to create new products and services.
"Executed well, these strategies provide for a profitable and growing business," he said.
However, Condit said this month’s terrorist attacks on the World Trade Center and the Pentagon have caused enough fear in the flying public to result in the grounding of about 900 aircraft as a cascade of struggling airlines cut their flight schedules by 20 percent and announced plans to eliminate about 80,000 jobs.
Chicago-based Boeing earlier this month said it would cut up to 30,000 commercial aircraft workers to cope with the downturn.
Condit compared what is happening to the airline industry now with what occurred during the 1991 Persian Gulf War, when there was a sharp drop-off of air traffic because of security concerns. He noted that it took a little over a year for air travel to recover to previous levels at that time, and said it will take longer to come back this time because we were attacked on our own soil using commercial jetliners as weapons.
As a result, Boeing has said it will deliver about 500 commercial aircraft this year. Before the Sept. 11 attacks, Boeing expected to deliver 538 aircraft. That’s about a 7 percent drop.
Condit said he expected about a 20 percent reduction in deliveries next year, with a rebound sometime in 2003.
Condit also said one of the duties of his company in the wake of this month’s terrorist attacks is to build more secure airplanes. He said Boeing is working with the U.S. Department of Transportation on effective new security measures.
Stronger cockpit doors are one thing the company is considering. But Condit said stronger doors are more complicated than installing dead-bolt locks. He said cockpit doors not only must make pilots secure but also be easy to open in an emergency.
He said technology developed by Boeing’s air traffic management and Internet units may have applications in commercial aircraft security.
Boeing is expected to benefit from increased military spending in coming months, but Condit said it is too early to determine the impact on the bottom line.
Shares of Boeing rose for the second straight day Tuesday, closing up $1.53 to close at $34.33 on the New York Stock Exchange.
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