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Boeing Hints at 787 Production Boost

Stocks in this article: BA UAL

EVERETT, Wash. ( TheStreet) -- Boeing (BA) is potentially looking beyond its planned ramp to production of ten 787s a month by 2013.

"If we get to ten, we can probably get to eleven, and if we can get to eleven, we can get to twelve," said Jim Albaugh, CEO of Boeing Commercial Aircraft, speaking at an investor day presentation on Tuesday. "We're probably not done on this program yet."

Albaugh prefaced the remark by saying he was not making an announcement about a production rate increase. He and Scott Fancher, general manager of the 787 program, repeatedly said that Boeing is committed to ten a month and will ramp up gradually to that level.

Still, the suggestion that Boeing could eventually produce more than ten 787s a month is not a surprise. Flightblogger, a blog that follows Boeing, has reported that Boeing has looked at boosting 787 production to as many as 17 a month in 2016.

Boeing could use more 787 production. The backlog is 835 aircraft. And aviation consultant Scott Hamilton said stepped-up production and impending early deliveries of the aircraft will likely stimulate demand. "There are two reasons airlines are not ordering more," Hamilton said. "One is that it isn't flying yet: until it's certified and flying and starts to be reliable, there is no reason to order it."

Secondly, he said, with no 787s available until 2017 or 2018, given the backlog, "Why bother?

"From a customer service standpoint, Boeing has to go beyond ten a month," Hamilton said.

A dispute with the National Labor Relations Board has also become a potential factor in 787 production. Currently Boeing plans production of seven 787s a month in Everett and three a month at a new plant in Charleston, S.C. Last month, however, the NLRB ruled that Boeing violated labor law because it moved some 787 production to Charleston in order to retaliate against the International Association of Machinists for striking. Boeing has denied the charge.

A hearing before an administrative law judge, set for June 14, is likely to be just the first step in Boeing's challenge to the ruling. Meanwhile, a spokesperson for the NLRB general counsel has clarified, in an interview with TheStreet, that Boeing could resolve the conflict by building ten aircraft a month in Everett and whatever additional number it chooses in Charleston.

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