Next months to seal fate of Boeing C-17

Boeing said yesterday its C-17 transport plane program is at a critical juncture and the next months will determine the fate of the company’s production line beyond July 2011.
Barring further orders from the US Air Force, the production line is facing a shutdown in July 2011, even though the company believes it could sell 20 to 30 aircraft overseas in coming years, said Tommy Dunehew, vice president of business development for the Boeing program.
“We need a US line open and US orders to keep the place open. International by itself doesn’t do it,” he told Reuters in an interview at the annual Air Force Association meeting.
Dunehew said the company was anxiously awaiting the outcome of House-Senate negotiations on the fiscal 2010 defense appropriations bill. The House added three aircraft to its bill, while the Senate added 10. “We’ll make our decisions based on what comes out of that,” he said.
Boeing has said it ideally needs about 15 aircraft orders to maintain an economically viable production line, but Dunehew said it would probably be able to continue building airplanes if the order was around 10 to 12, especially if there were some near-term certain foreign orders in the offing.
If Congress approved funding for two to three planes, then Boeing would likely add those orders to the end of the current production run, and move to shut down the line, Dunehew said. Each aircraft order extended the line for three weeks, so an order for three more planes would add nine weeks, he said.
The company had promising prospects for international sales and was in talks with several customers in the Middle East and elsewhere, he said, noting that Qatar had an option for two more planes, and Britain was expected to order two more.
Boeing was also closely watching developments in Europe, where the A400 military transport being developed by EADS has run into big delays, which could generate demand for C-17s until the European planes are available.
But foreign orders alone could not sustain the line, because they were too unpredictable and generally too small.
Shutting and restarting production would be prohibitively expensive, he said. Earlier estimates by the Government Accountability Office put the cost at around $2 billion (R14 billion).
“Right now we’re in a critical stage of the program,” Dunehew said, noting that Boeing was already using its own funds to maintain suppliers since the program has a two-year build cycle. “We have to look at the reality of our business situation over the next month or two.”
The US Air Force has said it does not want to buy any more C-17s beyond the ones already on order, but US lawmakers have continued to earmark funding for dozens of planes in recent years to maintain jobs on the program.
A study of the Pentagon’s mobility needs, due in December, could spawn further orders for the C-17, especially if the Air Force decided to retire 59 aging C-5A transport planes made by Lockheed Martin Corp, Dunehew said.
The Pentagon’s Quadrennial Defense Review, which is due to wrap up this fall in time to inform the fiscal 2011 budget process, could also point to further C-17 orders.

Pic: Boeing C-17 plane taking off