The Boeing 777 assembly line in 2015. (Ian Terry / The Herald)

The Boeing 777 assembly line in 2015. (Ian Terry / The Herald)

Boeing to make fewer 777s; Everett job cuts likely

EVERETT — Cuts are coming to the Boeing Co.’s 777 line — deeper and sooner than previously planned by company leaders.

The company announced plans Monday to cut production from the current 8.3 airplanes a month to five a month in August — a roughly 40 percent cut. The decision likely will mean job cuts next year in Everett, where the 777 is assembled, though how many and exactly when is not clear.

Boeing already planned to reduce production to seven a month in early 2017. As the 777X goes into final assembly in 2018, 777 deliveries are expected to drop to about 3.5 airplanes a month.

The company has struggled to sell its classic — and profitable — long-haul workhorse as it develops a successor airliner, the 777X. Demand for twin-aisle airplanes has dried up in recent years after several years of heavy spending from airlines. Some customers also may be waiting for the 777X, which is slated to enter service in 2020. The low cost of fuel means airlines are as financially pressed to upgrade to newer, more efficient models.

Monday’s announcement comes one day after Boeing and Iran Air signed a deal that includes 15 777-300 Extended Range (ER) airplanes, with deliveries beginning in 2018.

However, that deal, which still could be sunk by Republicans in Congress, is not enough to buoy the 777 line, said Elizabeth Lund, a Boeing vice president and general manager of the 777 program.

Boeing still needs to bring in more 777 orders to keep the line working at the lower rate, she said. “Our sales team will continue their tireless work to fill existing openings in our skyline at the five airplanes per month production rate.”

“The 777 program does expect some impact on employment next year,” Lund said in an email to employees. “While the exact number of affected positions has not been determined, we will do our best to lessen the impact.”

Boeing will not say exactly how many people work on the program.

An aerospace industry study commissioned by the state estimated that the 777 program supported about 19,700 jobs at Boeing in 2012.

Jon Holden, the head of IAM District Lodge 751, which represents Boeing workers in Western Washington, said the union did not know how many Machinists would be affected by the lower production rate.

“Going forward, we will discuss with the company the potential for using voluntary layoffs, with the hope of avoiding involuntary layoffs,” Holden said. “We also will monitor other Boeing job moves during this time. We have great concern about the number of jobs leaving our facilities in Puget Sound for new locations where the company is creating jobs, capacity and capability outside of Washington state.”

Lund told employees that “continuing to work aggressively to reduce costs” will bolster the 777’s competitiveness. The plane has faced intense pricing pressure in recent years as Boeing has worked to bridge the gap between the 777 classic and 777X.

Industry analysts see further 777 rate cuts as likely, though. In October, Boeing CEO and Chairman Dennis Muilenburg indicated further rate cuts might be necessary.

The company could have to drop monthly output by one airplane each year as 777 production is cut to the bone to make way for the 777X, said Richard Aboulafia, an aerospace analyst and vice president of the Teal Group, a consulting firm.

“The twin-aisle market is glutted,” he said.

Boeing likely will try to keep the 777 line going for at least a couple years after the 777X enters service with airlines in 2020, said Scott Hamilton, an aerospace analyst based on Bainbridge Island.

The company is planning a roughly two-year transition between the 737 Next Generation and the 737 MAX, both of which are made in Renton.

Demand for the 777 Freighter could extend the life of the 777 classic line a few years longer, especially if Boeing closes the 747 line.

Currently, Boeing delivers about 20 large freighters a year — counting 777s and 747s, said Alan Hedge of ACMG, which tracks the cargo market and publishes an air freighter demand forecast.

“We think demand won’t drop lower than 15 freighters a year” in the next few years, he said.

Boeing has indicated it does not plan on introducing a 777X freighter until a few years after the 777X enters service.

The company’s chief rival, the Airbus Group, has not shown any interest in moving into the large freighter market, so “Boeing likely will be the only game in town,” he said.

The news of the 777 production rate cut came the same day that Boeing raised shareholders dividend to $1.42, a 30 percent increase.

The company has increased the amount about 190 percent over the past four years, and it consecutively has paid quarterly dividends for 75 years.

Boeing also has sent value back to shareholders by buying back stock — $7 billion worth this year. The company’s board has authorized buying back up to $14 billion in shares.

“As our team delivers on our large and diverse order backlog, and drives greater efficiency across our business, Boeing is well positioned to generate increasing cash flows and meet our commitment to provide competitive returns to our shareholders,” Muilenburg said in a statement Monday. “At the same time, Boeing is continuing to invest in our people, innovation and growth as part of a balanced cash deployment strategy.”

Buying back shares quickly delivers value to investors and is more flexible than raising dividends, which shareholders often expect to remain up. However, some industry watchers say Boeing could better use the money by investing in program development.

Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com. Twitter: @dcatchpole.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

LifeWise local co-directors Darcie Hammer and Sarah Sweeny talk about what a typical classroom routine looks like on Monday, April 14, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Everett off-campus Bible program draws mixed reaction from parents

The weekly optional program, LifeWise Academy, takes children out of public school during the day for religious lessons.

Protesters line Broadway in Everett for Main Street USA rally

Thousands turn out to protest President Trump on Saturday in Everett, joining hundreds of other towns and cities.

An EcoRemedy employee checks a control panel of their equipment at the Edmonds Wastewater Treatment Plant on Thursday, April 17, 2025 in Edmonds, Washington. (Olivia Vanni / The Herald)
Edmonds launches technology to destroy PFAS

Edmonds is the first city in the country to implement… Continue reading

Over a dozen parents and some Snohomish School District students gather outside of the district office to protest and discuss safety concerns after an incident with a student at Machias Elementary School on Friday, April 18, 2025 in Snohomish, Washington. (Olivia Vanni / The Herald)
Parents protest handling of alleged weapon incident at Machias Elementary

Families say district failed to communicate clearly; some have kept kids home for weeks.

Irene Pfister, left, holds a sign reading “Justice for Jonathan” next to another protester with a sign that says “Major Crimes Needs to Investigate,” during a call to action Saturday, April 12, 2025, in Arlington. (Aspen Anderson / The Herald)
Arlington community rallies, a family waits for news on missing man

Family and neighbors say more can be done in the search for Jonathan Hoang. The sheriff’s office says all leads are being pursued.

Mary Ann Karber, 101, spins the wheel during Wheel of Forunte at Washington Oakes on Tuesday, April 1, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Lunch and Wheel of Fortune with some Everett swinging seniors

She’s 101 and he’s 76. At Washington Oakes, fun and friendship are on the menu.

Connect Casino Road Director Alvaro Gullien speaks at an Everett City Council meeting to share community thoughts regarding affordable housing and preventing displacement of those that live along Casino Road on Wednesday, April 16, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
How will Everett’s comprehensive plan work in Casino Road?

Residents in the diverse, tight-knit neighborhood want “Investment without displacement.” The city’s plan will help achieve that, staff say.

Henry M. Jackson High School’s FIRST Robotics Competition championship robotics Team 2910 Jack in the Bot on Thursday, April 24, 2025 in Mill Creek, Washington. (Olivia Vanni / The Herald)
Mill Creek robotics team celebrates world championship win

The team — known as “Jack in the Bot” — came in first place above about 600 others at a Texas world championship event last week.

Trees and foliage grow at the Rockport State Park on Wednesday, April 3, 2024 in Rockport, Washington. (Annie Barker / The Herald)
Washington Legislature approves hiking Discover Pass price to $45

The price for a Washington state Discover Pass would rise by $15… Continue reading

The Washington state Capitol on April 18, 2025. (Photo by Jacquelyn Jimenez Romero/Washington State Standard)
Parental rights overhaul gains final approval in WA Legislature

The bill was among the most controversial of this year’s session.

Snohomish firefighters appeal vaccine suspensions to Ninth Circuit

Despite lower court’s decision, eight men maintain their department did not properly accommodate their religious beliefs during COVID.

A rental sign seen in Everett. Saturday, May 23, 2020 (Sue Misao / Herald file)
Compromise reached on Washington bill to cap rent increases

Under a version released Thursday, rent hikes would be limited to 7% plus inflation, or 10%, whichever is lower.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.