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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (436)	7/1/1998 8:00:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

"Boeing production woes over, inefficiency lingers" By Martin Wolk SEATTLE, July 1 (Reuters) - Boeing Co. executives on Wednesday cautiously declared an end to airplane production problems that have plagued the manufacturer but said they have substantial work ahead to restore the company's financial health. In separate conference calls with analysts and reporters, Boeing Chairman Phil Condit and other executives said the company has completed a production recovery plan laid out in October, when they were forced to halt work on two assembly lines for a month to clear bottlenecks caused by parts shortages. ''We are certainly more stable than we've been since October, and we are in better shape on all fronts,'' said Ron Woodard, president of the company's commercial airplane group. Investors welcomed the news, sending Boeing's stock up $2.875 to $47.44 on the New York Stock Exchange, still well below the peak of $60.50 hit last July. The assembly line shutdowns were the most visible symptom of a rash of problems that have cost Boeing $3 billion and led to the company's first annual loss in 50 years. The problems came just as Boeing was trying to raise production to unprecedented levels to meet rising demand from a financially strong airline industry. While Boeing executives said they have reduced the number of parts shortages and jobs behind schedule to normal levels, they were understandably cautious when asked whether their problems were behind them. ''It's not a black and white answer because we've still got some things to do,'' Condit said. ''We've got a lot of production efficiency to get into our factories.'' Boeing executives said the company's work force has peaked at about 238,000 and will begin declining soon, but said they no longer expect to cut 12,000 jobs from the commercial airplane group this year, as projected in December. Condit said new employment projections will be issued this month along with second-quarter results. Analysts said Boeing must reduce its work force to boost profits, which are expected to remain low this year compared with the high levels of production. PaineWebber analyst Jack Modzelewski said the main problem was an aggressive price war between Boeing and rival Airbus Industrie just as the highly cyclical industry hits a peak. ''It's the worst pricing since the Jet Age began,'' he said. ''The question is, 'Are we going to have a profitless prosperity?' and I think we have a pretty good chance of that this up cycle.'' Woodard declined to concede defeat in a major competition to supply new narrow-body aircraft to British Airways Plc, long a loyal Boeing customer, which is reported to be close to placing its first order with Airbus. ''We have made an offer that we feel is as aggressive as we can prudently do when we consider our overall desire to improve shareholder value,'' he said. ''We're just going to have to see what happens.'' Analyst Bill Whitlow of Safeco Corp. said he thought the comment was an encouraging sign that Boeing had backed away from a policy of pursuing market share at almost any cost. Boeing said it delivered 61 commercial jets last month and 247 in the first half of the year, keeping the company on track to reach its target of 550 for the year, compared with 375 last year. Boeing initially trumpeted the delivery totals as a record for the month and the quarter, but a spokesman later said he could not confirm that. He explained that Boeing had not done a complete historical analysis including figures from McDonnell Douglas Corp., which it acquired last year for $16.3 billion. Boeing also said it has 19 planes that have been completed but are being held in storage, mainly because of the economic crisis that has battered Asia's airlines and made it difficult for Asian companies to get financing for new jets. Boeing already has announced plans to cut back production of the lucrative 747 next year due to the Asian woes, and Condit said he did not see any ''optimistic signs'' that the region's economic crisis would end any time soon. Woodard said no Asian carriers have asked to cancel orders, but Boeing is trying to find new buyers for three jumbo 747s ordered by financially struggling Philippine Airlines.