By Bryan Corliss
Herald Writer
The Boeing Co. will drastically cut back on production during the next two years, a move that likely means it will follow through on plans to lay off 30,000 workers, top company officials said Wednesday.
Chairman Phil Condit said Boeing, which delivered 527 jets last year, will build about 380 planes this year and 275 to 300 in 2003.
Those production cuts won’t mean layoffs beyond the 30,000 already predicted. But that could change if conditions worsen.
"If we go lower, we’re going to have to make the cuts to go with it," Condit said as the company released its 2001 year-end financial results Wednesday.
Boeing eliminated 9,000 jobs during the last quarter of 2001, but it counted severance for all 30,000 people to be laid off against this year’s earnings, chief financial officer Mike Sears said.
The company to date has given layoff notices to 19,000 workers, about 11,600 of them around Puget Sound.
Despite the cutbacks, Boeing delivered 527 jets last year, up from 489 in 2000, Condit said. That’s a remarkable total, he added, given the disruptions caused by the February earthquake and the September terrorist attacks.
Condit said he couldn’t say when orders would start to rebound, and he sidestepped a question about Airbus officials who have projected the two jet builders would split about 650 orders this year.
"It’s going to be really tough to estimate what the sales look like" in 2002, he said. "In a period like this, there’s too much fluctuation to predict orders."
Likewise, there’s no knowing whether 2003 will see the market bottom out or continue to fall, Condit said. "We don’t have good insight today when that’s going to go back up."
Boeing could get some good news today. The company has scheduled a press conference with Ryan Air, a European discount air carrier that previously said it was in talks to buy as many as 100 737s.
Condit wouldn’t comment on the Ryan Air announcement Wednesday.
Boeing will continue research into the Sonic Cruiser and other new airplanes, including a longer-range version of the 777, Condit said.
The Sonic Cruiser’s launch date is in flux given the post-Sept. 11 airline crisis, Condit said.
"It is clearly different than it was," he said. "It depends a lot on the airline customers."
The company’s fortunes changed dramatically with the September terrorist attacks.
For the year, Boeing reported strong growth in both profit and revenue. Profits rose 20 percent, from $2.5 billion in 2000 to $3 billion. Revenues increased 13 percent, from $51.3 billion to $58.2 billion. Earnings per share increased 26 percent, to $3.63.
For the fourth quarter, however, Boeing’s profits plummeted from $481 million to $100 million. Revenue climbed 7 percent, to $15.7 billion. Earnings per share for the quarter tumbled to 12 cents, down from 55 cents in the fourth quarter of 2000.
Boeing’s Seattle-based Commercial Airplane Group reported year-end revenues of $35.1 billion, up from 2000’s total of $31.2 billion.
However, profits fell to $2.6 billion, down from $2.7 billion, due to the cost of severance packages for laid-off workers. Without that cost, the group would have shown a profit of $3.5 billion and a 10.1 percent profit margin, the company said.
Commercial’s fourth-quarter profits evaporated, falling to $82 million, compared with $856 million for the same quarter of 2000.
The company told analysts it expects revenue to drop from $58 billion to $54 billion in 2002 and to about $52 billion in 2003.
You can call Herald Writer Bryan Corliss at 425-339-3454
or send e-mail to corliss@heraldnet.com.
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