Boeing says it is cutting production of the venerable 747 jumbo jet next September from 18 per year to slightly less than 16 a year.
The reduction, which comes after years of weakening demand for the big jetliner, is a “minor adjustment” that “will allow us to continue to run a healthy business,” the Chicago-based company said in a statement Tuesday.
The reduction was necessary “because the near-term recovery in the cargo market has not been as robust as expected. We continue to believe in the long-term strength of the freighter market, and the 747-8 is uniquely positioned to capture this demand,” according to Boeing’s statement.
“The production rate change is not expected to have a material financial impact,” Boeing spokesman Doug Alder said. “There may be some employment impact, but we’ll do our best to mitigate that by placing employees in other jobs at” Boeing Commercial Airplanes.
Many analysts see the reduction as another step toward the demise of the program that brought Boeing to Everett in the 1960s.
“It’s death by a thousand rate cuts,” said Richard Aboulafia, an aerospace analyst and vice-president of the Teal Group in Fairfax, Virginia.
Boeing twice reduced rate in 2013.
“It was inevitable,” Aboulafia said. “There is just such a weak cargo market and demand for jumbo passenger airplanes is almost non-existent.”
Analysts have long predicted that Boeing would need to make fewer 747s if it wanted to keep the line working late into the decade. That would be long enough for Boeing to bid on a contract to replace the airplanes used to ferry the U.S. president and staff, commonly known by the radio call sign Air Force One.
Inside Defense reported this week that the Air Force wants to buy replacements in 2016 with delivery in 2018. Previously, the military had said it didn’t need to take delivery until 2021.
But there is little chance Boeing can keep the 747 line busy that long.
Boeing currently has 39 unfilled orders — 26 for the passenger version and 13 for the cargo version of the latest model, the 747-8.
Several customers, though, have delayed taking delivery of finished airplanes, which for now sit unpainted at Paine Field by Boeing’s Everett plant.
Since January 2013, only 19 747-8s have been ordered. And only two of those orders came this year.
The rate reduction going into effect next year
Dan Catchpole: 425-339-3454; firstname.lastname@example.org; Twitter: @dcatchpole.