Boeing pulls back on 747-8 production

Cathay 747-8F_cloudy-small_3In one of the clearest signs yet that confidence in the 2016 cargo market is weakening, Boeing said last week that it plans to scale back production of the 747-8 freighter from one aircraft per month to one every other month. The reason cited for the 50 percent reduction in production is the slowdown in the air cargo market, according to Boeing and media reports.

Last year, Boeing had previously said it would cut back production from the current 1.3 of the slow-selling aircraft per month to one per month, which is the pace it expects to achieve this coming March. This latest reduction of the 747-8F production plan to 0.5 per month will happen by September, Boeing said.

“Global air passenger traffic growth and airplane demand remain strong, but the air cargo market recovery that began in late 2013 has stalled in recent months and slowed demand for the 747-8 freighter,” said Boeing vice chairman and chief executive of commercial aircraft, Ray Conner.

However, our sister publication, Cargo Facts, reported that it’s the passenger variant of the 747-8 that’s not getting any orders, and, in fact, the demand for the 747-8 freighter is healthy, with a backlog of 25 of the freighters.

Boeing will record a US$569 million charge against fourth-quarter earnings because of the cutback. Additionally, Boeing will announce its fourth-quarter financial results on Wednesday.

The four-engined 747, which is easily recognizable with its forward hump, is fading out in favor of more fuel-efficient, twin-engine 777Fs and 767-300Fs. But, in its lifetime, more than 1,500 have been delivered since the first one flew in 1969. Some earlier orders for the 747-8, which were cancelled, have left Boeing with four 747-8 “white tails,” which are aircraft already built, sitting waiting for a buyer.

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