By Julie Johnsson / Bloomberg
Boeing will raise production of its 787 Dreamliner in 2019 and bolster a key accounting measure that will improve the plane’s long-term profit margins, Chief Executive Officer Dennis Muilenburg said.
Both moves signal Boeing’s confidence that the carbon-composite jetliner will continue to generate strong sales despite a tough market for long-haul aircraft, Muilenburg said at a Morgan Stanley conference Wednesday.
Speeding production will help Boeing generate more cash from its most-advanced plane as the company slows output of the 777 ahead of transitioning to a new model. The company will increase Dreamliner output to 14 planes a month from the current rate of 12.
The Chicago-based planemaker is also increasing the accounting block for the 787 that it uses to calculate expected sales and profitability of the aircraft under arcane program-accounting rules.
The company is adding 100 units for a total of 1,400 sales for the Dreamliner. Doing so will give Boeing a greater number of aircraft sales over which to spread the nearly $30 billion in production costs amassed on the Dreamliner.
The shares reversed an earlier decline and advanced 0.7 percent to $242.20 at 1:23 p.m. in New York. Boeing’s 55 percent advance through Tuesday was the biggest on the Dow Jones Industrial Average.
The Dreamliner has netted 78 aircraft orders this year, and that doesn’t include tentative deals such as the agreement for eight of the twin-aisle planes announced Tuesday by Malaysia Airlines.