Boeing plans for weaker jet market

Associated Press

ST. LOUIS — The air-travel industry will need a relatively long time to return to health, Boeing Co. Chairman and CEO Phil Condit said Wednesday.

Speaking to analysts during the company’s annual investor conference, Condit said the dot-com euphoria contributed to the number of people flying, and so air travel numbers were a "bit artificial."

Dot-com employees traveled "at the drop of a hat," Condit said, and they tended to fly first class and business class. Business from those travelers began to drop off even before Sept. 11.

Airline travel hit a bottom point because of Sept. 11, and "it will take a while for airline traffic to come back," Condit said.

Boeing, the Chicago-based aerospace company, said it has adjusted its production schedule accordingly.

Condit said the current downturn in the U.S. economy "is a pretty mild" one, and he’s optimistic because the productivity numbers have been strong. He said he expects the economy to "keep chugging along."

In response to a question about what Boeing’s priorities are for using its cash, Condit said the company is looking carefully at opportunities where it can leverage its strengths and increase its value.

It won’t make an acquisition that doesn’t accomplish that, he added.

Boeing may also buy back some of its stock, Condit said.

The aircraft maker also would like to get back to an AAA credit rating, the executive said. The company’s credit rating was likely downgraded more as a reaction to what’s going on in the world than from something specific at Boeing, Condit said. The company’s balance sheet is in good shape, he noted.

Standard &Poor’s credit rating for Boeing is A-plus, and Moody’s Investors Service’s rating is A-2.

Boeing continues to expect it will deliver about 380 airplanes this year and between 275 and 300 aircraft next year, said Alan Mulally, president and chief executive of Boeing’s commercial airplanes unit.

Boeing’s low point in production will be in 2003, with Boeing estimating some recovery in 2004, Mulally said.

Still, Boeing wasn’t counting on production coming back when it devised its business strategy, he said.

Boeing delivered 527 airplanes in 2001.