By Bryan Corliss
Herald Writer
SEATTLE — Some good will come out of the airline industry crisis sparked by the Sept. 11 terror attacks, the Boeing Co. vice president in charge of marketing commercial airplanes said Tuesday.
The crisis has forced airlines to rethink the way they operate, sparked consolidation among aircraft parts suppliers and accelerated efficiency drives already under way at Boeing, said Boeing Commercial Airplanes Vice President Nicole Piasecki.
All this will lead to "a much more stable and healthy airline environment" for the future, she said. But for now, "there are some short-term dynamics that suggest a lot of pain out there."
Piasecki spoke to investors at a conference sponsored by brokerage firm Ragen MacKenzie.
Airline travel will be back to pre-Sept. 11 levels by August, Piasecki said. But Boeing doesn’t see itself bouncing back until 2004, she said.
Planes are filling up, but that’s because airlines are luring flyers back with "severe discounting," she explained. "They have to become profitable before they start buying new airplanes again."
The sales slump should bottom out next year, Piasecki said. Boeing still expects to deliver 380 jets this year, and between 275 and 300 next year. Improved prospects for sales of single-aisle jets suggest the total might be closer to 300, she said.
Low-cost carriers like Southwest Airlines and Ireland’s RyanAir are making money even with air travel down, Piasecki said. That’s causing major carriers like British Airways and American Airlines to reconsider their operations.
"They’re looking to outsource functions they always kept inside," including engineering, Piasecki said. This represents an opportunity for Boeing to gain new business providing engineering and other services for airlines, she said.
The success of the low-cost carriers also is good news for Boeing, which has captured more than 90 percent of that market with its next-generation 737s, she said.
And the crisis has airlines thinking about consolidating, pulling back from marginally profitable routes or even merging, Piasecki said. That would stabilize the notoriously boom-bust jet market and be good for the industry in the long term.
The Sept. 11 crisis also has led to consolidation of aircraft parts makers, Piasecki said. "We’re taking advantage of that," she said, by working more closely with the surviving suppliers to ensure higher quality.
Boeing responded to the crisis by cutting production rates in half and laying off tens of thousands of workers. However, this led Boeing to speed up the implementation of more efficient production practices, she said.
That has led to "real results" that "are very powerful for our business," Piasecki said. The new 737 moving line in Renton, for example, has allowed Boeing to assemble a jet in 15 days, rather than the 27 days it took in 1997.
You can call Herald Writer Bryan Corliss at 425-339-3454
or send e-mail to corliss@heraldnet.com.
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