Guy Norris/LOS ANGELES
Boeing has decided to terminate production of the MD-11, with the last delivery, possibly the 200th aircraft, scheduled for February 2000.
The move was expected, even though the tri-jet gained a surprise seven-month reprieve last November when Boeing elected to continue marketing the freighter version of the aircraft.
At that time, it announced the closure of the MD-80 and MD-90 lines, which will be completed one month ahead of the MD-11 termination.
"Despite all of our best sales and marketing efforts, the market for the passenger or freighter versions of this aeroplane has not developed. Therefore, we cannot justify keeping the production line open," says Douglas Products division president Dick Pearson in an internal memo to Long Beach staff.
The decision jeopardises the jobs of 3,750 Boeing employees, some 3,000 of whom are based at the MD-11 final assembly line in Long Beach, California. The company says that most of the impact on employment will not be felt until mid-1999 as the line begins to wind down.
The move will leave the Long Beach facility with only the C-17 airlifter and the 717 regional jet assembly lines and some 737 work. Some 6,000 of the 11,500 people employed at the site are at risk from the closures of the various assembly lines. Boeing is also considering starting a 737 line in Long Beach.
Boeing adds that the closure of the MD-11 line will "-not result in a separate special charge. However, certain MD-11 programme asset and liability valuation adjustments are expected to be included in second quarter earnings". Total MD-11 deliveries to date stand at 178, with a further 22 held on firm order, option and reserve. The first aircraft was delivered to Finnair in late 1990. At one time, McDonnell Douglas planned annual production of 60 aircraft, although the highest level achieved was 41 in 1992.
Several subcontractors will be affected by the closure decision, including Alenia, Korean Air and Mitsubishi.
Most of the firm orders are held by FedEx and Lufthansa, with the former now the world's largest MD-11 operator. The express parcels carrier is likely to be adversely affected by the closure since it will markedly increase the secondhand value of passenger configured aircraft, which FedEx buys for freighter conversion.
Lufthansa Cargo, which has eight MD-11Fs on order, says its order for the type "-took full account of the possibility of a cessation of production and its recent order for an additional three aircraft for delivery in 1999 was influenced by this situation". The airline also holds three options for delivery in 2000, which it says it has until November this year to firm up with Boeing and which are unaffected by the closure.
Further orders from other airlines cannot be ruled out.
Source: Flight International