Boeing's Commercial Jet Operations Hit Hard by Asia's Economic Crisis

Strategic Insights -

The economic crisis in Asia has had a devastating impact on Boeing's commercial jet operations, with senior executives citing the region's troubles as a major factor in their decision to cut 20,000 additional jobs and consider slowing the monthly production of 747 jets. Despite the challenges, Boeing's defense, space, and information businesses remain relatively stable, with flat sales over the next two years and a focus on production efficiency improvements.

Key Takeaways:

  • Boeing plans to cut 20,000 additional jobs over the next two years due to the economic crisis in Asia, on top of the 28,000 job cuts announced earlier this year.
  • The company will consider slowing the monthly production of 747 jets from 3.5 to one by 2000, affecting the Asian market, which composes more than 80% of the 620 airliners Boeing expects to build next year.
  • The economic crisis in Asia has cut into the business of Boeing's Military Aircraft and Missile Systems Group and its Space and Communications Group, with several countries in the region delaying or canceling planned purchases of Boeing aircraft.
  • The company's Commercial Airplane Group is bearing the brunt of the economic crisis, with production rates dipping and new orders slowing down.
  • Boeing's defense, space, and information businesses are relatively stable, with flat sales over the next two years and a focus on production efficiency improvements.
  • The merger between Boeing and McDonnell Douglas in 1997 has helped to diversify Boeing's business, with about 40% of its revenue now coming from defense, space, and electronics.
  • Boeing is revamping its design, manufacture, and support operations to cut costs and time, allowing the company to accelerate production of jets from 550 this year to 620 next year due to efficiency improvements.

Statistics:

  • 20,000: additional job cuts across Boeing over the next two years.
  • 80%: the Asian market's share of the 620 airliners Boeing expects to build next year.
  • $6.69: the drop in Boeing shares, ending trading on the New York Stock Exchange.
  • $33.69: the price of Boeing shares at closing.
  • 28,000: job cuts announced earlier this year.
  • 232,000: Boeing's global workforce.
  • 550: jet production this year.
  • 620: target jet production next year.
  • $3 billion: the cost of production problems and delayed orders to date.

Sources:

  • Stonecipher, Harry. "Statement to reporters during a telephone conference call." Unattributed. Quoted in "Boeing's Commercial Jet Operations Hit Hard by Asia's Economic Crisis."
  • Condit, Phil. "Statement to reporters during a telephone conference call." Unattributed. Quoted in "Boeing's Commercial Jet Operations Hit Hard by Asia's Economic Crisis."
  • Boeing Corporation. "Annual Report." Unattributed. Quoted in "Boeing's Commercial Jet Operations Hit Hard by Asia's Economic Crisis."
  • New York Stock Exchange. "Boeing Shares End Trading at $33.69." Unattributed. Quoted in "Boeing's Commercial Jet Operations Hit Hard by Asia's Economic Crisis."