Boeing will increase production rates of its Boeing 737 single-aisle jetliner to 34 airplanes a month from 31.5 a month, the company said Monday.
The change is slated for early 2012.
Last year, analysts were predicting Boeing would cut production in tough economic times for airlines. But in the past few months, Boeing executives have said they were debating whether to boost rates.
Boeing has 2,028 orders for 737s from more than 80 customers.
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"Even through the global economic downturn, our diverse 737 backlog has remained very strong," Boeing commercial airplane president and CEO Jim Albaugh said in a statement. "Increasing the 737 production rate is the right thing to do to meet the growth and fleet replacement needs of our customers."
The news is good for Wichita-based Spirit AeroSystems, which builds the 737 fuselage and derives half of its revenue from the program.
"Obviously, it's terrific news for us," said Spirit spokeswoman Debbie Gann. "We've said all along that we'd be poised to meet the customer's demand, whatever that might be."
Spirit CEO Jeff Turner said last month on a conference call that the company could handle a 10 percent or so increase from current rates.
Said Gann: "I do think we're going to try to leverage the business that we have and work the rate increase into our existing footprint. We've just got to work as lean as we can."
Will Boeing exit tanker competition? —Boeing is debating whether to pull out of a competition for U.S. Air Force tankers, leaving EADS as the sole bidder, according to the Air Force Times.
Boeing executives are privately considering whether Boeing can win the contract and make a profit, a senior Boeing executive told the Air Force Times.
But Boeing spokesman William Barksdale told The Eagle that the company is still planning to bid.
"We announced March 4 we intended to bid," Barksdale said. "That's the position we still have."
Congressional leaders and others have complained that illegal subsidies to EADS would lower the price of the Airbus aircraft. And company officials have complained that the Pentagon now appears to be favoring the European company.
" (Boeing CEO) Jim (McNerney) doesn't want to be in a position that we are going to bid a losing bid," the Boeing executive told the Air Force Times. "It gets difficult when you're dealing with a competitor who has flat-out said on several occasions that they're going to underbid us. How can they do that if the list price of their airplane is higher than the list on our plane? Because they are subsidized and we're a for-profit company. So the question we're asking is: How do we compete against four governments?"
Loren Thompson of the Lexington Institute, however, said what policymakers are probably trying to do is give EADS an adequate incentive to stay engaged in the bidding process.
"But," Thompson said, "if they go too far in helping the Europeans, the next round of tanker competition will be stillborn."