Boeing Co. (NYSE:BA) just announced a massive deal with Iran Air for 80 aircraft, but that’s doesn’t changed its plan for cutting output in 2017 of its long-range 777 airliner.
With Boeing Co. (NYSE:BA) jumping into the muddy political waters of selling planes to Iran Air, the company proposed the rate for its most profitable big airliner might have dropped more without the deal.
At the moment, Boeing manufacture around 100, 777 airliners each year and but from next year these numbers will drop to pace of 60 annually, or five each month, starting in August. It formerly publicized plans last year to drop it to manufacture just seven 777 per month next year, as it struggled to secure enough orders.
“Several ongoing twin-aisle campaigns…haven’t concluded in time to keep the rate steady,” wrote Elizabeth Lund, Boeing’s 777 program vice president.
As a result company predicts job losses, but Lund said, “The exact number of affected positions has not been determined.” Thousands of jobs are tied directly to production of the 777 in Washington State.
In the current Iran Air deal there are 15, 777-300ER jetliners. Those would be the first new Boeings supplied to Iran Air starting in 2018.
Boeings agreement with Iran Air can be in trouble though as President-elect Donald Trump considers the future of the nuclear agreement and its provisions that allow Western firms to sell to Iran.
Meanwhile Lund said in a statement that this Boeing’s deal with Iran was not enough to prevent the latest cut, but it did keep the rate from going lower.
“The decision to reduce rate, however, already factored [the deal with Iran Air] into our assessment of the near term market landscape,” said Boeing’s 777 Vice President Elizabeth Lund.
The 777 airliner is the spine of worldwide international air travel and the production rates are closely watched by investors as they measure the Boeing (NYSE:BA) profit.