Boeing dramatically changes tune on C-17 future

My visit to Boeing's St. Louis manufacturing hub for the F-15SG roll-out yesterday also included a mini-press conference with Chris Chadwick, president of Boeing Military Aircraft. 

Chadwick said several interesting things, but the most newsy involved his statements about the C-17.

Boeing's C-17 production line dies in 2010 unless it gets a new order next year. Boeing has always said they need to build at least 12 aircraft per year -- and preferably 15 -- to keep pricing at current levels -- roughly $220 million/aircraft, depending on how you count it.

Chadwick told us this position has dramatically changed in the last few weeks. Boeing now is analyzing how to build C-17s at a rate of eight per year while keeping prices roughly the same, although he declined to elaborate on pricing details.

Here's exactly what he said:

We remain cautiously optimistic in the near term. The supplemental will fund c-17s. We've got a big push on the international market for additional sales. 

But we've got to look inward ... cost a lot (??) C-17. So we've launched a concerted effort to come up with an approach that would allow us to reduce the production rate. Currently it's at 15 per year. We'd like to get it down to around the eight a year production rate at the right price, which is close to the price today.

And if we do that we believe there's demand out in the world internationally but also domestically that we can keep that production line going for a long time. It's a heck of an airplane, the customer loves it.

You've got to be realistic about what the market will bear. We've got to take out cycle time. We've got to take out cost. We're very focused on doing that. I've got a team working on that. They're supposed to report out to me in about six weeks from now about how best to do that.

The real focus there is your customer. The customer likes the capability. Internationally, a lot of customers are starting to take notice as we've seen.

We want to make sure we have the right product and the right price for a long long time.