US Securities and Exchange Commission filing puts hefty price on closing line as future of twinjet hangs in balance
Boeing has moved to stem the disquiet over the future of its 717 and 767 programmes in the wake of a US Securities and Exchange Commission (SEC) filing that warns that closing the 717 line could cost the company $400 million in charges.
While it is unable to deny the shrinking backlog for both models, the company stresses that legal requirements mandate the public release of risk mitigation plans to investors that would formerly have remained company confidential.
The long-threatened 717 has a backlog of 34 aircraft, the bulk of which are on order for Midwest Airlines (12) and leasing company Pembroke Group (14). Midwest has received 13 of the 25 it holds on firm order, and has options on a further 25. The airline says it is in a "better financial position than ever", and has no plans to adjust its 717 orders. The 14th 717 is due to arrive in March and its last in 2006.
AirTran Airways, the biggest single operator and launch customer for the 717, has another six on firm order. Three will be handed over in May, with the remaining three due for delivery in 2005. Turkmenistan Airlines, which flies three 717s, accounts for the balance of the orders.
The SEC filing "is not an indicator of any imminent programme termination. There are some campaigns under way and the outcome of these will determine the future of the programme," says Boeing. These include the Star Alliance 100-seater contest with the focus on a possible order from Austrian, Lufthansa and Scandinavian Airlines, an unspecified competition in China and a contested requirement for up to 12 new 100-seaters from an unidentified Pacific-based carrier.
Should the 717 programme be closed, "we could recognise a pre-tax earnings charge of approximately $400 million", says Boeing.
The long-term future of the 767 is tied to the fate of the US Air Force tanker decision, the outcome of which is expected around 1 May. The order backlog has dwindled to just 25 under the combined influences of poor market conditions, heavy competition from the Airbus A330-200, and the pending introduction of the 7E7 family.
GUY NORRIS / LOS ANGELES & STEPHEN TRIMBLE / WASHINGTON DC