Boeing, Airbus throttle back output of big jets

NEW YORK/PARIS/TOKYO -- The world's two biggest passenger-aircraft makers are reducing production of their largest planes, a response to sluggish emerging-market demand that could mean trouble for Japanese suppliers.

Further production cuts for Boeing's 777 may be ahead if orders remain low, CEO Dennis Muilenburg suggested at a Sept. 14 event for investors.


The U.S. manufacturer needs 40-50 orders annually to sustain production levels for the aircraft, but only eight have been received so far this year, Muilenburg told the audience. Output is already set to drop to seven planes per month next year from 8.3 currently.

The twin-aisle 777 forms part of many carriers' fleets, including those of Japan Airlines and domestic rival All Nippon Airways, part of ANA Holdings. Orders for the jetliner rose from 113 in 2013 to 283 the following year, only to plunge to 58 in 2015. Boeing looks to steer customers toward the newest member of the 777 family, the fuel-efficient 777X, initial delivery of which is expected as early as 2020.

Boeing's larger 747, a plane almost synonymous with the jumbo jet, has fallen on even harder times. Orders went from 12 in 2013 to zero the next year, with only two sold in 2015. Boeing has said that ending 747 production, which it cut from one per month to 0.5 in September, eventually may make economic sense.

With cheaper crude oil lessening demand for fuel-saving upgrades, more Boeing customers have chosen to continue flying older planes, a person familiar with the company said. At the same time, Middle Eastern and African airlines have put off orders of new jets amid uncertainty over the economic outlook, this person added.

Crude oil's price rebounded sharply on last week's agreement by OPEC members for a coordinated production cut -- the first in eight years, if it happens. But even if the cartel does lower output, it may not be enough to solve the problem of global oversupply, analysts say. For the passenger-jet market, the fundamentals look unlikely to change soon.

Small is big

Boeing rival Airbus is flying into the same headwinds. Singapore Airlines said last month it would not extend leases on some of the A380s in its fleet. The carrier appears put off by the double-decker jumbo's high maintenance costs.

Airbus is reducing production of its A380 jet.

For Airbus, the airline's decision marks a stinging loss of business from a valuable customer. Faced with poor demand from other buyers, the European aerospace champion had said in July it would reduce annual A380 production from last year's 27 units to 12 by 2018.

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