By Dan Catchpole
Everett Herald writer
EVERETT — The Boeing Co. is cutting the number of 747s it rolls out of its Paine Field plant annually by one-third by next March.
The company, which announced the production cut Wednesday, remains optimistic that it will still be making the jumbo airplane in the next decade. Industry analysts are divided on their outlook for the future of the iconic airplane, which first flew in 1969.
The new pace is sustainable, said Bruce Dickinson, a Boeing Commercial Airplanes vice president and head of the 747 program. “We feel really good about this rate.”
In September, the factory’s output will go from 1.5 a month to 1.3, before dropping to 1.0 a month in March. Work in the factory is already slowing down to the 1.3 rate and will start dropping to 1.0 a month this fall, he said.
By the end, Boeing will have cut 747 output in half since 2013, when it reduced production rate from 24 a year to 21 and then to the current rate of 18. September’s stepdown will decrease output to 16 airplanes a year. That will drop to 12 a year in March.
The upcoming rate reductions will mean fewer workers on the program, but they will be moved to other programs, he said. Boeing won’t “have to let anyone go from the company,” he said.
Workers on the 747 program were told Wednesday morning about the rate cut. The Chicago-based company has already talked with some suppliers about slowing 747 output, he said.
Demand for large cargo freighters will keep the line alive into the next decade, he said.
Since entering service in 2011, the 747-8 has struggled as airlines have shifted toward more direct and frequent flights using smaller passenger planes which are easier to fill.
The 747-8 freighter has been more popular, but the 2008 economic recession weakened the air cargo market and has been slow to recover. Other pressure on big freighter sales comes from increased cargo capacity in the bellies of passenger jetliners, such as the 777.
In recent years, there have been more big freight airplanes available than operators needed, so many were parked and sealed up for storage, he said.
“We’ve been watching this overcapacity, and wringing our hands as we’ve stepped down in rate,” said Dickinson, who joined the 747 program as chief engineer in 2011. He was promoted to lead the program last October.
Many of the stored planes are now back to flying, as more freight is moving by air, he said.
In a few years, Boeing could increase 747 output, he said.
Boeing’s European rival, Airbus Group, predicts even more demand for jumbos and superjumbos, such as its behemoth A380. Airbus has not landed an order for the double-decker A380 in more than a year, though.
Industry analysts are divided on what the future holds for the flying giants.
Consulting firm Deloitte’s top aerospace analyst, Tom Captain, said increasingly crowded skies and continued growth in Internet commerce will likely mean more demand for large aircraft, such as the 747 and A380, in the next decade.
Modernizing air traffic control will allow airplanes to fly closer together and more frequently at the busiest airports. That will temporarily relieve congestion in the skies around places such as New York, Dubai and Beijing, he said. “But that benefit will be short-lived.”
Airports will be hard-pressed to add slots for airplanes coming and going, and it will be easier for commercial air carriers to fly larger airplanes between congested cities, he said.
Other analysts say the 747’s time is limited.
Cutting production to 12 airplanes a year might not be enough to keep the line working much longer, said Scott Hamilton, an aerospace analyst and owner of Issaquah-based Leeham Co., in a Tuesday blog post.
At the end of May, Boeing had unfilled orders for 14 freighters and 18 passenger versions. At this month’s Paris Air Show, the company announced it had signed a memorandum of understanding for 20 747-8 freighters with Russia-based Volga-Dnepr Group.
That announcement, though, was “more about options than firm orders,” and deliveries would be spread out over seven years, so it doesn’t help fill the production gap, Hamilton said.
According to his analysis, at the current output rate, Boeing’s 747 backlog only keeps the line busy to 2017.
The U.S. Air Force has ordered two 747-8s for the president’s use, with the first to be delivered in 2018. Boeing could assemble the planes in 2017 and park them until delivery.
“Even at the new rate they’ve announced, they don’t have enough orders to keep the line going,” Hamilton said.
Dickinson dismissed speculation that Boeing will close the line after those planes are delivered.
“I can assure you from the highest levels on down that could not be further from the truth,” he said.
Dan Catchpole: 425-339-3454; email@example.com; Twitter: @dcatchpole.