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) -- Looking past the development stage of the 787, Boeing now faces a series of key decisions on other aircraft, starting with whether to further boost 737 production.

Boeing has already said it will

increase production to 34 airplanes in 2012, but now it is looking at bigger numbers, perhaps as many as 40, CFO James Bell said Tuesday at an investor conference. It is a tough decision.

"The demand is pushing us to look at rates higher than we've ever been (i.e. 40)," Bell said. "We don't know if that's sustainable, that's the issue. The balance between ramping up and losing share is a very delicate balance. We don't want to ramp up and then immediately have to ramp down.

Boeing 737

"There's a whole lot of things that make me nervous about 40," he added, including increasing competition from used aircraft as well as the question of whether current growth is sustainable, even in emerging economies that "have a huge need for transportation systems." A decision is likely by the end of the year, he said.

Saj Ahmad, who blogs about aircraft makers at, said: "Ramping up the 737 to 40 per month runs two major risks - first is what happens if there is a downturn and second is how quickly your suppliers can cut back without leaving you with unused inventory.

"The costs of going in reverse are much greater than going forward," he added.

Beyond its production decision, Boeing is looking at whether to put new engines on the 737 or to design an entirely new aircraft that could potentially bring the sort of fuel efficiencies that continue to make the 787 desirable despite the continuing delays. At the moment, with "what we see in engine technology today, we don't think the performance improvement is sufficient enough for a re-engine," Bell said.

Additionally, Boeing will decide whether to modify the 777 or create a new airplane, but those depend on what happens with its competitor, the


A350. "When that (aircraft) shows up and we know where it's going to be and what it will look like, we will respond," Bell said. "That will be a modified 777 or a new 777."

A certainty, Bell said, is that Boeing will not work simultaneously on major changes to both the 737 and the 777. The company will maintain sufficient R&D spending levels to do one or the other, but "we're not going to do two programs at one time," he said.

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Despite the 787 delays, Boeing should begin to show margin improvements as airlines take 787 deliveries over the next few years. "As you look out beyond 2013, we would expect this program would start producing good margins," Bell said. "We would expect this program to be as profitable over time as any airplane we've had."


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, which will take 787 deliveries starting in 2014, said it would use the aircraft on

trans-Atlantic and transcontinental flights.

In early afternoon trading on Tuesday, Boeing stock was down 39 cents to $61.71. Boeing remains one of the six


stocks to show a gain this year, but it is no longer the index's leader. Instead, an approximate 14% increase in its stock price puts Boeing third. Dow leader


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is up 21%.

-- Written by Ted Reed in Charlotte, N.C.


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Ted Reed