Boeing May Have To Trim Production Canceled, Delayed Orders Force Company To Respond

Boeing Co. executives met Wednesday to discuss possible cuts in production of 737 and 757 jetliners that could mean further reductions of the giant company’s payrolls.

A rash of canceled and delayed orders from airlines in the past week comes at a time when Boeing had thought the worst of the airlines’ woes was over.

In December, chairman Frank Shrontz predicted that Boeing would cut fewer jobs this year than last year’s 9,305. “My hope is that we are bouncing along the bottom and are going to see improvement,” Shrontz said at the time.

But by last Wednesday, when Boeing released its 1994 earnings, Shrontz warned that aircraft production might be cut further in 1996 because of “unfavorable operating results being experienced by certain U.S. airlines.”

Boeing is expected to announce new production and employment forecasts today. The Seattle PostIntelligencer and The Wall Street Journal reported Wednesday that the changes could result in 7,000 jobs being cut this year.

Boeing employed 117,331 people at the end of 1994, after five consecutive years of reductions.

Bill Whitlow, an analyst for Pacific Crest Securities in Seattle, estimated Boeing will cut monthly 737 production from 8.5 planes to seven by January, and cut monthly 757 production from four to three.

A week ago, Boeing reported that profits fell 48 percent in the fourth quarter to $157 million on revenues of $5.1 billion. The company blamed the drop on declining jet deliveries.

The bad news didn’t stop there:

On January 25, Air France said it canceled all its orders and options for new aircraft, including 10 Boeing planes.

Continental Airlines said last Thursday it would delay deliveries of 40 Boeing jets that were to start in 1996.

On Friday, USAir said it would defer acceptance of eight Boeing 757 jetliners scheduled for 1996 delivery.