Boeing Buckles Up For Airline Takeoff
Kelsey Swanekamp, 03.19.10, 11:20 AM EDT
Aircraft maker accelerates production schedules in anticpation of industry rebound.
Boeing is banking on an airline recovery after announcing that it will ramp up production of two of its commerical jets in anticipation of growing demand.
The aerospace giant will increase production of the 747 in mid-2012 to a pace of two units per month, from 1.5 units, and the 777 in mid-2011 to seven units per month, from five units. The ramp-ups are one year and six months ahead of schedule, respectively.
By accelerating its production timetables, Boeing ( BA - news - people ) is making a bet that airlines, which have been battered by the recessionary drop in discretionary spending and business travel, will dust themselves off in the coming years.
Boeing predicts that the industry will stabilize in 2010 and return to profitability in 2011. "As a result, we anticipate an increase in demand for airplanes in 2012 and beyond," says Randy Tinseth, vice president for marketing. Shares of Boeing gained 1.7% to $72.06 Friday morning.
Airline stocks meanwhile, have been rallying as analysts and investors alike look factor in a recovery.
On March 9, airline presentations at th JPMorgan Chase Aviation, Transportation & Defense conference hinted at a broad industry rebound and sent shares of top carriers on a tear. The combination of easy-to-beat comparisons to recession levels and firmer demand in the business travel market should provide a lift. (See "Airlines Soar On Recovery Hopes.") With its involvement in international travel markets, Delta Air Lines ( DAL - news - people ) is well-positioned to benefit from recovery in business travel.