February 7, 1995 in Nation/World

Md-11 May Go Out Of Production Mcdonnell Douglas Decision Reflects Airline Slump

Associated Press
 

McDonnell Douglas announced Monday it may temporarily halt production of its big MD-11 jet next year, in yet another setback to the stagnating commercial aircraft industry.

The news came four days after Boeing said it will cut an additional 7,000 jobs on top of the 9,305 it jettisoned in 1994.

The developments are telling signs that the long-anticipated upturn in commercial flying has yet to arrive. Although more people are buying tickets than in the early part of the decade, many airlines can’t seem to get out of the red due to high costs.

McDonnell Douglas blamed a severe shortage of orders for the 300-seat MD-11 and said it may halt production for up to six months.

Spokesman Tom Williams said thousands of workers would face temporary layoffs.

“It’s something that’s very serious, that we don’t want to do,” Williams said. “But it’s something you have to honestly look at.”

Without new orders for the MD-11, McDonnell Douglas may deliver as few as 10 next year, down from 36 in 1993.

Ironically, the situation comes just a few weeks after McDonnell Douglas reported a record year of profits, thanks to military jet production and declining costs.

Industry analysts still believe the industry will recover, but they predict it will be a slow one because struggling carriers have learned to be more cautious in their buying.

“This is going to be a slow recovery,” said Howard Rubel, an analyst with the Goldman Sachs & Co. in New York. “My sense is that barring a major recession, we’ll see gradually improving production rates from ‘95 or ‘96 on.”

© Copyright 1995 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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