August 28, 1996 in Nation/World

Boeing Boosts Output, Payroll Company To Hire 5,000 More Workers, Hike Production Of 777 Jetliner

Anthony Effinger Bloomberg Business News
 

Boeing Co. said it will speed up output of its new 777 jetliner and hire 5,000 more workers to meet surging demand for all its aircraft.

Seattle-based Boeing had planned to add 8,200 workers this year. Now it said it will add 13,200 as part of its first round of hiring in seven years, bringing total employment to 118,350.

The world’s largest commercial aircraft maker also said that by July 1997, monthly production of the twin-engine 777 will rise to seven per month from five.

Though Boeing’s business has been booming, “the magnitude and timing of the increase (in 777 output) were both a surprise,” said Paul Nisbet, an aerospace analyst at JSA Research in Newport, Rhode Island, because the company had production problems earlier this year.

Nisbet said he raised his earnings estimates for Boeing after hearing that the company planned to make 777s quicker. He expects the company to earn $5.75 a share in 1997, up from a previous estimate of $5.60. Nisbet expects Boeing to earn $2.85 a share in 1996, excluding any one-time gains or losses. Analysts with Bear Stearns & Co. and Lehman Brothers Inc. also raised their earnings estimates.

Airlines around the world are using surging profits to replace old aircraft and add new ones. Boeing has booked 333 orders for new jetliners so far this year, compared with 346 for all of last year and just 120 in 1994.

The production increase is the fourth Boeing has announced since December. As a result, production of Boeing’s 777, 747 and its smaller 737 models is poised to double next year.

Boosting production has been a challenge for Boeing. For six weeks this summer, workers on the 777 wing-production line were forced to work 10-hour days and two out of every three weekends to end delays. The mandatory overtime on the wing line ended on Aug. 19, said Boeing spokesman Peter Conte.

A 37-day strike at Boeing’s Winnipeg, Manitoba, plant also hurt Boeing, creating parts shortages that had managers scrambling to keep production on track. The strike ended earlier this month.

Boeing said it hasn’t missed any deliveries to customers because of production problems or the strike.

The 777 is proving to be one of Boeing’s most popular planes. Singapore Airlines Ltd. ordered 34 of the twin-engine, wide-body planes in November, and took options for 43 more. This month, UAL Corp.’s United Airlines ordered two 777s as part of an order worth $2.5 billion.

First delivered last year, the 777-200 can carry 305 passengers in three classes, and 375 in two classes. The 209-foot-long plane can travel up to 5,680 miles, allowing it to fly non-stop between Chicago and Honolulu or New York and London.

The 777-200 costs between $128 million and $146 million, depending on the features airlines request. The allure of the 777 is that it carries a large number of passengers, like a four-engine plane, with the fuel efficiency of a two-engine plane.

As of July 31, Boeing had an order backlog of 245 777s. The company’s total backlog was 1,143 planes.

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