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Boeing supplier in talks on early 747 wind-up

A major Boeing supplier says discussions have opened over possibly ending 747 production as early as the first half of 2019, but Boeing says there are no plans to close the 50-year-old production line.

Triumph Group makes fuselage panels and sections, lower rudder sections and the empennage of the 747 under a contract with Boeing that expires in mid-2019. Last year, Boeing withdrew a plan to insource fuselage panel production to a company-owned factory in Macon, Georgia.

In ongoing talks with Boeing, the manufacturer is discussing the timing for finally halting production of the venerable widebody, says Triumph chief executive Dan Crowley, who spoke to analysts on a fourth quarter and 2016 earnings call in early February.

“We're in discussions with Boeing about the end of the 747 programme, when will it come. They had planned to offer some of our work to make in Georgia. They've stepped back from that plan. And now, based on the market demand for that platform, they're going to decide does the programme go beyond our current contract obligation or end early,” Crowley says.

Triumph’s aerostructures division has reported a forward loss on every fuselage panel it delivers to Boeing for installation on the 747 through the contract period. That means Triumph would financially benefit if Boeing decides to close the 747 production line when the supplier’s contract expires in mid-2019.

For its part, Boeing says its remains “confident” in the sales outlook for the 747, pointing to an order last year by UPS for 14 747-8 Freighters.

“We continue building 747-8s, and there are no plans to discontinue that work,” Boeing says. “We fully expect the cargo market to rebound in the coming years as existing freighters are in need of replacement.”

Boeing has steadily curtailed 747-8 production from a 2012 peak of 31 deliveries. After delivering only nine 747-8s in 2016, the Everett, Washington-based assembly line now delivers the widebody at a rate of six aircraft per year.

After delivering 110 747-8s through 31 January, Boeing has orders for 26 aircraft remaining the backlog, but those numbers include four from defunct Russian carrier Transaero.

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