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Published on : Saturday, July 30, 2016
As originally conceived, the biggest Boeing of all was primarily for cargo. But its iconic shape, including the exclusive upper-deck “bubble”, made it a favourite with passengers and airlines.
The company announced on Wednesday that, if they are unable to obtain sufficient orders and/or market, production and other risks cannot be mitigated, they could record additional losses that may be material, and it is reasonably possible that they would decide to end production of the 747.
Earlier this week Boeing had reported its first quarterly loss in nearly seven years. The jumbo jet already showed signs of drawing to a close in January when it was announced that production of the 747 would be reduced to just six a year by September. The production rate was 1.5 per month last June, and is currently one per month.
Dennis Muilenburg, Boeing’s chief executive, said that, they have decided to reduce future production expectations and revenue assumptions to account for current and anticipated weakness in the air cargo market.
Passenger airlines mostly gave up on the double-decker 747 several years ago, with few ordering the Boeing 747-8, the latest iteration, which debuted with Lufthansa in 2012.
Even as airlines started preferring more efficient two-engine aircraft, such as the Boeing 777 and Boeing 777-300, the manufacturer had been hopeful the newest-generation 747 could continue to sell to cargo operators. Muilenburg added that, despite the ongoing challenges of the air cargo market, they continue to see the 747 as a unique and significant value creator for their customers over the long term.
It isn’t only Boeing which is facing a drop in its orders. Boeing’s chief rival, Airbus, confirmed this week that it would also be cutting production of its Airbus A380 “superjumbo” jet by half, as airlines favour smaller two-engine jets over four-engine models.
The company is currently talking with customers to determine whether there is a large enough market to justify the tens of billions that will need to be spent on development.