767 line unlikely to avoid shutdown

Boeing will probably halt production of its 767 model while the U.S. Air Force decides whether to use the plane as a refueling tanker, interim Chief Executive Officer James Bell said yesterday.

"I'm not overly hopeful" about uninterrupted production of the plane "even if we had a tanker program today," Bell said during a conference in New York that was broadcast over the Internet. "We'd probably have to have a break in the line because of when that delivery schedule will be."

Congress in October scrapped an agreement to lease and buy 100 tankers based on the 767 because Boeing's illegal hiring of a former Air Force procurement official may have influenced the awarding of contracts. The Pentagon and Air Force are revising the acquisition process after the $23 billion agreement collapsed.

The Air Force had set aside $552 million between fiscal 2007 and 2011 for research and $8.58 billion to start buying the tankers, which are used to refuel bombers, fighters and other planes in the air.

Boeing may face competition from Airbus, a unit of European Aeronautic Defence & Space, for the tanker contract if the proposal is reconsidered.

"If we're looking at a 2008 tanker start, the 767 could be gone," said Richard Aboulafia, an aerospace consultant at Teal Group in Fairfax, Va. This could mean a huge breakthrough for Airbus."

A decision on whether to "break" the 767 production line in Everett will likely be made by midyear, Bell said at a Smith Barney conference. New orders for the jet from a commercial customer or the government would extend that, he said. Tanker deliveries had been expected to begin this year.

Bell became interim CEO on Monday after Harry Stonecipher was ousted because of a relationship with a female executive that violated Boeing's code of conduct.

Bell, who is not under consideration for permanent appointment as CEO, said he had taken himself out of the running, Reuters reported.

"If there are any CEOs in the audience, they know why I don't want the job," he said.

"For a business like Boeing, we need someone with pretty significant operating experience background," he added, noting that 15 months ago he had been the company's controller.

Layoff notices linked to plant sales

WICHITA, Kan. — Boeing will issue thousands of layoff notices Friday, as part of a process to sell its commercial-aircraft operations in Kansas and Oklahoma to Onex, the Canadian firm that's likely to hire many of the workers back into their old jobs.

In a memo sent yesterday to employees, Boeing executive Jeff Turner assured them the notices are part of the separation and re-employment process required as Boeing transfers assets to the Toronto company.

Onex agreed last month to buy Boeing's massive commercial-aircraft plant in Wichita, plus other work sites in Tulsa and McAlester, Okla., for $900 million cash and the assumption of $300 million debt. Despite Turner's assurances, the notices alarmed Bob Brewer, the Midwest director of the Society of Professional Engineering Employees in Aerospace. He said it is still uncertain how many laid-off workers will be hired.

"It says not to panic, but then it does not tell you whether or not they have employment into the future," Brewer said. "That is what is pressing."

The majority of the affected workers are longtime Boeing employees who have never before lost their jobs despite downturns in the aviation industry, Brewer said.

It is still uncertain exactly how many workers will get notices Friday, said Boeing spokesman Dick Ziegler.

Boeing had about 7,300 workers in its commercial-airplane group in Wichita as of Friday, Ziegler said.

As many as 1,300 people work at Boeing's two smaller facilities in Oklahoma.

The Associated Press

EU trade official sees Airbus, Boeing accord

European Union Trade Commissioner Peter Mandelson said yesterday he's aiming for "an amicable solution" with the U.S. within the next month on capping immediate support for the newest Airbus and Boeing aircraft, putting off an agreement on general subsidies.

"I'm certainly prepared to see modifications of upcoming production programs of both companies," Mandelson told German lawmakers in Berlin.

"We can put everything else on the table at a later date," he said, indicating that an April accord may only apply to development aid for the planned Airbus A350 and Boeing 787.

The U.S. and EU gave themselves until April 11 to agree on new subsidy definitions and avoid arbitration at the World Trade Organization that may have outlawed financial supports for both Boeing and Airbus.

Bloomberg News

Jet forecast slashed for Latin America

Boeing has cut its 20-year forecast for aircraft demand in Latin America and the Caribbean by 24 percent as carriers in the region struggle to obtain new financing.

The plane maker now expects those airlines to buy as many as 1,600 new planes by 2023 for about $88 billion, down from its 2003 estimate for 2,100 units worth $107 billion, said John Wojick, Boeing's regional vice president of sales.

Financing for Latin American airlines has tightened in the past five years.

Currency devaluations and an economic slowdown in some countries led several carriers, including Viacao Aerea Rio-Grandense, Boeing's largest Latin America customer, to default on their debts.

As a result, airlines may lease or buy second-hand aircraft instead of new ones because they are cheaper to finance, Wojick said.

Bloomberg News