Boeing Co., seeking to reclaim its title as the world's biggest commercial-plane maker, will boost production of its largest jets to meet increasing demand as airlines recover from the recession-induced travel slump. The manufacturing rate on the 777 will return to seven a month in mid-2011, instead of early 2012, Chicago-based Boeing said Friday in a statement. Output of the 747 jumbo jet will rise to two a month, from about one and a half, starting in mid-2012, a year earlier than planned, the company said. The move comes less than a year after Boeing decided to cut 777 rates and delay 747 increase plans as carriers canceled or deferred orders because they couldn't find financing and grounded older aircraft to cut capacity. Industry analysts, aircraft lessors and financiers had said Boeing and larger rival Airbus SAS would have to scale production back further. “Market improvement and our conservatively managed approach to production have put us in a position where we see it necessary to raise aircraft output,” Jim Albaugh, the president of the commercial-planes division, said in the statement. There has been a “dramatic pickup” in air-freight shipments in the past four to five months, and passenger traffic is improving as well, marketing chief Randy Tinseth said in an interview today. Tinseth repeated a forecast that airlines will return to profitability in 2011, boosting demand for planes the following year. Global traffic rose in January after the worst drop in demand since World War II last year, according to the International Air Transport Association. Albaugh said earlier this month that he was considering raising production rates and would decide in April about the wide-body 777 and by mid-year for the single-aisle 737, which was built at a record rate last year. The company has to give suppliers enough time to adjust their own production before changes to the aircraft delivery schedules can be implemented, and lead times for some parts can stretch to two years. Boeing said in April 2009 it would cut output of the $246 million 777 jet to five a month this June and delay planned increases on the 747 and 767 programs. That move led to a charge of 38 cents a share. The accelerated production increases announced today aren't expected to have a material effect on 2010 financial results, Boeing said. Boeing fell 15 cents to $70.72 at 4:15 P.M. in New York Stock Exchange composite trading on Friday. The shares have more than doubled in the past year. Toulouse, France-based Airbus, which surpassed Boeing in deliveries every year since 2003, said March 9 it would raise its production rate on A320 single-aisle jets in December to 36 a month, from 34, after cutting output last year. In 2009, Airbus - a unit of European Aeronautic, Defence & Space Co. - handed over 498 jets compared with Boeing's 481 for an industry record that analysts said couldn't be sustained amid the recession.
