Why is Boeing Rethinking Production Targets?

Boeing (NYSE:BA) is not only on track to hit its production rate target for its 787 Dreamliner next year, but the planemaker is also considering raising that target, Jim Albaugh, chief executive of Boeing Commercial Airplanes, said on Tuesday.

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The 787 Dreamliner, which came to market last year, is already more than three years behind its production schedule because of development delays. Its currently hopes to produce 10 per month by the end of next year, a target that some experts doubt Boeing will be able to meet. Its current production rate stands at 3.5 per month.

Boeing has taken more than 850 orders for the plane, which promises fuel savings.

Albaugh said on a webcast of the company’s annual investor conference that the program leaders are exploring whether the company can make the planes any faster than the 10-per-month target.

“Just last week, they finally put a number higher than 10 on the chart,” Albaugh said. “Now don’t write down that we’re going to higher than 10, but we’re trying to understand what it would take to get higher than 10. Once we get to 10, we’ll look at where we want to go from there.”

Boeing aims to assemble seven Dreamliners per month at its Washington factory and three per month at its South Carolina assembly plant. Last month, Albaugh said he believed the South Carolina line could hit or exceed its rate target.

Albaugh said earlier in the webcast that demand for new planes is growing because global airlines are fundamentally healthy. Boeing last month reported stronger-than-expected first-quarter profit as it pulled in orders while accelerating commercial production

Boeing, the world’s largest aerospace and defense company, turned in a stronger-than-expected first-quarter profit last month as it pulled in orders while accelerating production on all its commercial airplane programs.

“Commercial airplanes remains an attractive growth market,” Albaugh said. “Despite the choppy pace of global economic recovery, airline fundamentals generally remain intact, and demand for new planes is strong and growing and fueled by replacement aircraft in many many cases.”

Boeing logged orders for 805 commercial airplanes last year, though it lost to European rival Airbus, which logged 1,419 orders.

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