Boeing Sees $1 Billion Charge For Ending Production Of Mcdonnel Passenger Jets

Boeing Co. will take a charge of at least $1 billion in the fourth quarter for ending production of the MD80 and MD90 jetliners and possibly other operations, analysts said. The MD80 and MD90 aircraft are part of the $2.6 billion of commercial airplane assets owned by McDonnell Douglas Corp., which Boeing acquired this year. Last week Boeing said some write-offs, charges or adjustments involving McDonnell assets might be taken in the fourth quarter.

‘It’s pretty clear that the production life of the MD80 and MD90 are drawing to a close,” said Wolfgang Demisch, an analyst with BT Alex Brown. “That implies that a good chunk of the Long Beach (California) facility will be substantially underutilized.”

Boeing’s board is holding a regularly scheduled meeting today and is expected to discuss the future of various McDonnell products, including the MD95 jetliner, which has only one customer. The world’s biggest airplane maker plans to make an announcement about McDonnell assets around Nov. 3, said Boeing spokeswoman Sherry Nebel.

The $1 billion-plus write-off for McDonnell will be in addition to other charges related to manufacturing inefficiencies, Demisch said.

Last week Boeing said it will write off $1 billion starting in the fourth quarter and into next year for assembly-line bottlenecks as it increases production to record rates. On Friday the company reported a third-quarter loss after taking a $1.6 billion charge for the inefficiencies.

Demisch also cast doubt on the economic viability of the MD95 regional jetliner, which Boeing has said may be developed into a family of two or three planes.