Source: NDTV Profit TV channel

INTERVIEW - Boeing near decision on 787 production capacity

June 7, 2006

By Tova Cohen

TEL AVIV (Reuters) - Boeing Co. could make an announcement as early as this summer on whether it will double production capacity of its fast-selling 787 Dreamliner, a senior executive at the plane maker said on Wednesday.

The mid-sized 787 is sold out from 2008, the first year of delivery, until 2010, and 2011 is on its way, too, Randy Baseler, Boeing's vice president of marketing for commercial airplanes, told Reuters at the company's office in Tel Aviv.

"There are still a lot of people who want planes," he said. "We are studying a production increase on the 787. We could make an announcement as early as this summer."

Boeing officials said the company was looking at adding a second production line but they would not comment on where it might be.

The 787, which will replace the 767, makes use of composite materials to reduce weight and help airlines battle fuel costs. It is Boeing's fastest-selling aircraft ever, Baseler said.

Boeing has received 360 firm orders from 26 airlines for the long-range aircraft. Continental Airlines Inc. announced on Tuesday it would buy 10 more 787s, bringing its total orders for the new plane to 20.

All Nippon Airways will be the first carrier to take delivery of the 787, probably in the second quarter of 2008, Baseler said.

Boeing sales director for Europe Jim Frank said the company was in talks with all three of Israel's airlines -- El Al Israel Airlines, Israir and Arkia -- for 787 purchases.

Arkia said last month it was in advanced talks to buy four 787s, while El Al, which operates an all-Boeing fleet, has said it was looking at the 787 as well as at Airbus aircraft.

El Al has not indicated when it might make a decision.

"We are encouraging them to move quickly," Frank said, adding that an airline placing an order now might not receive the 787 before 2012.

Noting that the 787 would enable Israeli airlines to fly non-stop to the U.S. West Coast with 250 seats, he said it could also open up markets for Israeli airlines in Asia or even South America.

Both Boeing and its rival Airbus are coming off a record year in orders in 2005. Last year Boeing reported 1,002 net commercial jet orders, while Airbus took 1,055 orders.

While orders are expected to fall back this year, Baseler said it "will continue to be a strong order market".

As of May 30, Boeing had 347 firm orders, not including Continental's latest order.

While Asian and European airlines were the strong growth drivers until now, U.S. legacy carriers have not been in the market for new planes for financial reasons.

"American carriers have been ordering, just not the traditional ones," Baseler said.

Traditional European flag carriers have also been missing, he said.

That is why Baseler believes the current cycle for orders will be elongated.

He said he expected traditional U.S. and European carriers to be in the market by the end of this year or the beginning of 2007.