The New York Times reports that Boeing has turned down the request of Southwest to add 2 planes to its recent order of 80. Demand for Boeing aircraft is increasing, especially considering that Airbus has had problems with the A380 and the A350.
Scott E. Carson, the new head of Boeing Commercial Aviation, has vowed to make restraint a virtue. A decade ago, Boeing manufactured eight planes, including the MD series of aircraft. Now, they make the 737, the 767, the 777, and 747, as well as the 787 Dreamliner, which is still in development. Now, with half of the plane models, they also have half of the suppliers it had then, mainly from Japan and Italy. The airframe manufacturing division in Wichita was sold, and is now a subcontractor, which removes the financial risks of that division from Boeing’s bottom line.
However, subcontracting means that your subcontractor or supplier can become someone else’s. There is nothing to stop these organizations for working for Airbus, or even Embraer or Bombardier. When Boeing owned everything, they only could work for Boeing. The various unions are not pleased, as the outsourcing means a loss of jobs, and that the years of working to turn the company around are rewarded with that.
Boeing’s cautiousness may mean they’ve learned from the problems of their competitor, Airbus. They intend to not overcommit before they have all the kinks worked out in their production system. Once they do, they plan to crank out 10 787s a month, up from a traditional 7 widebody aircraft, but build up to it slowly…
For Southwest, however, even though Boeing had to say no, it did point the carrier in the direction of two slightly used 737s that Ford Motor wanted to rid themselves of. And perhaps it is better that way. Last time, they flooded the market and had to sell them at cut-rate prices, even as their production lines could not keep up with the pace.