Sales drought takes 757's scalp

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GUY NORRIS / LOS ANGELES

Boeing decides to end production after Continental Airlines decision sees firm backlog for twinjet shrink to 12 aircraft

Boeing plans to end production of the 757 twinjet at its Renton plant near Seattle by the end of next year, following a decision by Continental Airlines to change its last batch of aircraft on order from 757-300s to 737-800s.

Boeing has held off its long-expected decision to axe the line with a rearguard sales campaign that yielded only five additional orders from Shanghai Airlines in China. More ambitious bids to sell further -300s to charter carriers and even new-build -200PFs to FedEx Express failed to materialise, leaving a firm backlog of just 18 until Continental's announcement on 16 October reduced this to 12 aircraft.

Continental's decision was "clearly a factor" says Boeing Commercial Airplanes president Alan Mulally, who adds the final demise of the 757 was caused by the emerging prospect of the 7E7 and "really by Boeing technology and the Next Generation 737". He says the 757 line closure will not affect the 737's Renton assembly line. "We are making a pretty big investment in Renton to improve the tooling and efficiency. The 737 is going to stay there," Mulally says.

Continental is still due to take its final five -300s in 2004, while Northwest Airlines was scheduled to receive its 16th and final -300 this month. Air 2000 will take a final -200 around April 2004 while Shanghai is scheduled to accept three -200s between April and June. The Chinese carrier is scheduled to take its last two -200s in April and June 2005, though these are now expected to be manufactured by the end of 2004 and either delivered early or stored pending handover early the next year.

Boeing will take a third-quarter pre-tax charge of $184 million, "principally related to termination and shutdown costs", says the company. Assuming all current -300 orders are fulfilled, production will end with 55 aircraft - Boeing's smallest "orphan" fleet since the 747SP - which could severely curtail residual values.

Since deliveries began in late 1982, 1,034 757s have been handed over to more than 55 customers. Annual delivery rates remained above 40 for most of the life of the programme.