Boeing to Cut 777 Production in 2010

(MoneyWatch) 

As predicted, Boeing this week announced a 29-percent cut in production of its 777 widebody jets for next year.

Starting next June, Boeing will cut back the pace of 777 deliveries, from seven to five a month. The company also says it has scrapped plans to pick up the pace of production on its 767 and 747-8 models. It's been producing about one a month of each so far this year.

The cutbacks won't effect Boeing's top-selling 737 jets. Boeing's Renton factory has been pumping them out at a rate of 30 a month.
The reason? Sharp drops in airline traffic worldwide. As we discussed last month, the International Air Transport Association is reporting double-digit declines in both passenger and cargo traffic, and is projecting combined losses for the world's airlines of $4.7 billion in 2009.

Airlines in the Asia/Pacific region will take the biggest losses, IATA says, and that's particularly bad news for Boeing, given that fully 29 percent of its total order backlog (and 36 percent of its 777 orders) are from airlines in that region.

The production cutbacks are likely to mean more layoffs for Boeing's Seattle-based Commercial Airplanes division. The company already had announced plans to cut some 4,500 workers from its 67,000-strong Commercial Airplanes unit, part of a company-wide workforce cut of 10,000 people planned for this year.