Boeing to cut Dreamliner rate, may reduce production to only one facility

Local News

NORTH CHARLESTON, S.C. (WCBD) – The global health pandemic has impacted the aviation industry and Boeing is facing cuts to its Dreamline rate. It may also limit production to just one facility.

In a message to employees on Wednesday, Boeing President and CEO Dave Calhoun said the challenges the company is facing is due to the ongoing pandemic and said the impacts on the aviation sector continue to be severe.

“Though some fliers are returning slowly to the air, their numbers remain far lower than 2019, with airline revenues likewise reduced. This pressure on our commercial customers means they are delaying jet purchases, slowing deliveries, deferring elective maintenance, retiring older aircraft and reducing spend — all of which affects our business and, ultimately, our bottom line,” said Calhoun.

Although Calhoun said there have been encouraging signs, he said it could take three years to return to 2019 passenger levels.

“To bolster our near-term liquidity, we suspended our dividend, terminated our share repurchasing program, reduced discretionary spending and overhead costs, and issued $25 billion in new debt,” he said.

He said these steps helped the company navigate the pandemic but said it does not change the different commercial marketplace. “We must change with it,” said Calhoun.

The next steps for the company include slashing the Dreamliner rate and consolidating production to one plant – that means it would be between North Charleston and Washington.

The changes include further lowering our commercial airplane production rates:

– We will have a slower ramp-up in 737 production than previously planned, with a gradual increase to 31 per month by the beginning of 2022.

– We will reduce the combined 777/777X production rate to two per month in 2021, which is one unit lower per month than we announced last quarter.

– We will further reduce 787 production to six per month in 2021. This is an adjustment down from the reduction we announced last quarter to 10 per month currently and seven per month by 2022. With this lower rate profile, we will also need to evaluate the most efficient way to produce the 787, including studying the feasibility of consolidating production in one location. We will share more with you following our study.

– While our 767 and 747 rates remain unchanged, in light of the current market dynamics and outlook, we’ll complete production of the iconic 747 in 2022. Our customer commitment does not end at delivery, and we’ll continue to support 747 operations and sustainment well into the future.

Dave Calhoun, Boeing President and CEO

“Regretfully, the prolonged impact of COVID-19 causing further reductions in our production rates and lower demand for commercial services means we’ll have to further assess the size of our workforce. This is difficult news, and I know it adds uncertainty during an already challenging time,” Calhoun said in his statement to employees. “We will try to limit the impact on our people as much as possible going forward. And as always, we will communicate openly, honestly and transparently with you.”

Copyright 2020 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


WCBD News app graphic_1558160087567.png.jpg

Click for latest news and information