SEATTLE _ Citing "softness" in the widebody jet market, Boeing chief financial officer Greg Smith said Wednesday that the airplane manufacturer will decide in the next couple months whether to further cut back planned production of its large 777 jet.
Smith indicated that the dearth of widebody jet sales may also mean Boeing won't raise output of the 787 Dreamliner as high as planned.
A further 777 production rate cut and a lower-than-planned 787 rate _ added to the possibility signaled last month that Boeing could shutter the 747 jumbo jet assembly line _ would mean less work in the Seattle-area city of Everett and potential job cuts there, though it's unclear how severe the impact might be.
Boeing has already committed to slowing production of the current 777 from today's rate of 8.3 jets per month _ that's 100 per year _ down to 7 jets per month in 2017. The rate will decrease further to 5.5 jets per month during the transition to the new model 777X in 2018.
Speaking at the Jefferies Industrials Conference in New York, Smith said it's unclear if new orders will arrive in time to match those planned production rates.
"Over the next couple of months, we'll know," Smith said. "We'll either solidify those orders ... or we'll modify the production rate."
Boeing has said it needs to sell 40 to 60 jets per year to fill all the open 777 delivery slots at the between now and the end of the decade.
So far this year, it has booked just eight net new orders.
Smith did not indicate how much lower the rate might go.
Local aviation analyst Scott Hamilton of Leeham.net said the 777 order backlog suggests a rate of about 4 aircraft per month is sustainable without further sales.
One indicator that the 777 market is in trouble came in a Securities and Exchange Commission filing late last month by global aircraft lessor Intrepid Aviation.
Intrepid, which has six 777s on order from Boeing, revealed it hasn't yet found airlines to take four of those planes _ three scheduled for delivery next fall and the other in early 2018.
Sam Pearlstein, aerospace analyst with Wells Fargo, wrote in a note to investors that "this highlights why Boeing's goal of 40-plus annual new 777 orders will remain a challenge."
Smith also lowered expectations on production of the 787 Dreamliner.
Next year, 787 production is set to rise from today's 10 jets per month to 12 per month. And Boeing had planned to make 14 per month by the end of the decade.
Now that second rate hike looks uncertain.
"We're going to match supply and demand, and if it doesn't play out to be 14, then we'll adjust accordingly," Smith said. "It's not the end of the world if you went from 14 to 12 ... We can still be profitable."
While the 787 sold at record levels prior to entering service, sales slowed dramatically afterwards.
In the first five years of sales, Boeing sold 700 Dreamliners. In the five and a half years since, it has sold 400 more.
So far this year, Boeing has added just 19 net new orders for the jet.
Last week, Leeham.net's Hamilton wrote that even the planned rate of 12 Dreamliners per month could be challenging to sustain without more 787 sales.
In an interview Wednesday, Hamilton said that if 787 production is further pared back, it's likely the cutbacks will come in Everett rather than at the assembly line in North Charleston, S.C.
The South Carolina line's prospects are bolstered by the fact that Boeing will build the largest Dreamliner model, the 787-10, only at that plant.
If the 787 rate were cut, along with the possibility of a 777 production cut and the 747 line closing, "by the end of the decade, it's very possible we could be looking at some lean times in Everett," Hamilton said.
And he warned that the new 777 model that's in development, the 777X, doesn't have enough sales to suggest a big recovery when it enters service in 2020.
Boeing has 306 firm orders for that new jet, and has booked no new orders within the past year. Hamilton said that's only enough to sustain a production rate of 4 or 5 a month.
"The 777X isn't going to be any kind of savior," he said.
Hamilton said Washington state officials need to do "a deep dive into the potential scenarios" and come up with a pro-active plan to capture new work for Everett _ whether that's Boeing's next new airplane or aerospace work from other companies.
