Pembroke order cancellation is last coffin nail for McDonnell Douglas-designed line and ends California production
Boeing is to shut down production of the 717-200 in mid-2006, marking the end of civil airliner manufacturing in California and terminating the lineage of the McDonnell Douglas-designed commercial product line.
"Unfortunately, the overall market for the aircraft does not support continuing 717 production,"says Boeing Commercial Airplanes president Alan Mulally.
The closure is believed to have been prompted by the decision of leasing company Pembroke to cancel its 14 outstanding commitments. Boeing is making a $615 million writedown to cover the cancellation of the 717 and charges associated with the development of the 767-200C for the aborted US Air Force KC-767 tanker programme.
The 717's backlog has dwindled to 18 with the loss of the Pembroke orders, taking the orderbook down from 169 to 155, of which 137 have been delivered. Last year was another lean one for the programme, with only eight new orders and 12 aircraft delivered.
The final blow by Pembroke also came after a succession of failed sales campaigns in 2003 and 2004, the latest large-scale defeat being the loss of the Cebu Pacific DC-9 replacement to Airbus with the A319 (Flight International, 13-19 July 2004). The sales problems in 2004 compounded the company's failure to expand the 717 family with the possible -300X stretch derivative in 2003.
The final aircraft will be delivered at monthly intervals to AirTran, which has a further eight on order; Midwest, with an additional eight; and Turkmenistan, which has two still outstanding. The 717 closure will cost $340 million, or $60 million less than expected by Boeing in March 2004, when it issued its first specific warning of a possible line closure at Long Beach. At the time, the company announced it would take a "forward loss charge" because orders fell significantly below expected sales, and so increased the programme's overall costs.
The move also represents a blow to Rolls-Royce and the BR715 engine, for which the 717 is the sole application. The BR715 earned a launch position on the then MD-95 project with its selection by ValuJet (now AirTran) in 1995.
Losses associated with the production and storage of a 767-200C airframe for the USAF tanker programme are around $275 million. The aircraft was developed as a company-funded prototype for the proposed KC-767.
GUY NORRIS / LOS ANGELES