Posted on: Thursday, December 13, 2001

Boeing to reduce 717 production

Advertiser Staff and News Services

CHICAGO — Boeing Co. announced today that it has decided to keep manufacturing its slow-selling 717 jetliner, but at a reduced production rate reflecting lower demand.

The decision pleased Hawaiian Airlines, which has been replacing its fleet of 15 interisland DC-9 aircraft with 13 of the more fuel-efficient Boeing 717-200s.

"We are happy to hear they made that decision; however we were not concerned about our fleet plans," said Hawaiian Airlines spokesman Keoni Wagner. The last of Hawaiian's 13 planes is due to arrive in the Islands on Dec. 24, Wagner said.

Continuing production of the 717 "does give us the flexibility to acquire additional planes in the future," Wagner said.

While stopping short of scrapping the 100-passenger plane, as Boeing said eight weeks ago it might do, today's decision means further layoffs at the 4,500-worker plant in Long Beach, Calif., that assembles it.

Boeing spokesman John Thom confirmed that more job cuts are anticipated because of the lowered production, with the scope and timing still to be determined. Despite the prospect of additional layoffs, he said, Boeing employees welcomed the news that the threatened program will survive.

"Everybody here is very pleased with the announcement," he said from Long Beach. "We didn't know which way it was going to go. Everybody here wants to keep building and delivering this airplane."

The 717, known as the MD-95 before Boeing acquired it in the 1997 merger with McDonnell Douglas, is the industry's leading 100-passenger plane but the only one of Boeing's production lines currently losing money. It was in trouble even before the Sept. 11 attacks further dried up the market for it, with 600 announced layoffs in May and 600 more in August.

"After a thorough evaluation of the program and market, Boeing has made a business decision to continue production of the 717," the company said. "However, due to reduced near-term demand following the events of Sept. 11, the program will go forward with a lower production rate and revised delivery projections."

Analysts had said until the past few days that the program was certain to be abandoned.