SEATTLE (Reuters) – Boeing Co (BA.N) and suppliers set the final number of parts it would need for the 747 jumbo jet program at least a year ago, signaling the end for a plane that democratized global air travel in the 1970s but fell behind modern twin-engine aircraft, industry sources said on Friday.
Boeing’s “Queen of the Skies”, the world’s most easily recognized jetliner with its humped fuselage and four engines, marked its 50-year flying anniversary in February 2019, clinging to life thanks to a cargo market boom fueled by online shopping.
But the end for the program has been hanging in the air for years amid falling orders and pricing pressure. The coronavirus pandemic has also crushed passenger travel and demand for new jets.
The last order for a passenger version came in 2017, when the U.S. government asked Boeing to repurpose two 747-8 jetliners for use as Air Force One by the U.S. president.
Boeing declined to confirm that it was pulling the plug on the 747 program, first reported by Bloomberg News on Thursday.
“At a build rate of 0.5 airplanes per month, the 747-8 program has more than two years of production ahead of it in order to fulfill our current customer commitments,” a Boeing spokesman said.
“We will continue to make the right decisions to keep the production line healthy and meet customer needs,” he added.
The end of the 747 would follow Airbus SE’s (AIR.PA) phasing out of its A380 jumbo jet. In June, the last convoy of outsize parts for the world’s largest airliner crawled towards an assembly plant in southwest France.
The death of the 747 program could also mean charges and layoffs for halting production at the mammoth wide-body plant outside Seattle. It could also have financial implications on newer programs such as the 787 Dreamliner and the latest model of 777, which would have to bear a larger share of the plant’s huge overhead if the 747 line went dark.
One supplier source said he was not sure when Boeing made a formal decision to end the program but said the final number of ship sets – as complete sets of parts are known – was agreed to with the supply base at least a year ago.
Boeing has also removed language from financial filings that said it would continue to “evaluate the viability” of the 747 program, which one industry source said was a tell-tale sign of its plans.
Reporting by Eric M. Johnson in Seattle; Additional reporting by Tim Hepher in Paris; Editing by Daniel Wallis
If anything in life is predictable, it’s steady sales of the Ford F-150.
The popular pickup saves the day — every quarter, every year — for Ford Motor Co.
America loves its trucks. And, global pandemic or not, trucks sell.
The F-Series allowed Ford to reflect the smallest second quarter sales drop of the Detroit Three.
Ford reported a 33.3% drop in second quarter sales compared to 2019, from 650,336 vehicles to 433,869, the company reported Thursday. And year-to-date sales dropped 24.1% to 903,357 vehicles.
“Coronavirus concerns clearly affected Q2,” Ford said in a statement.
Meanwhile, General Motors reported a 34% drop in sales to 492,489 vehicles sold during April, May and June. Fiat Chrysler Automobiles saw a 39% decline to 367,086 vehicles sold, in second quarter results reported Wednesday.
GM had a bright spot with the Chevy Blazer. And FCA had Jeep Gladiator.
NUThis April, May and June period has been “unprecedented and crazy” and “challenging,” Mark LaNeve, Ford vice president of marketing, sales and service, said.
Even trucks took a hit this time.
The F-Series saw a 22.7% drop in second quarter sales, from 233,787 to 180,825, compared to 2019. When comparing compared year-to-date sales over the previous year, Ford F-Series dropped 18.1% to 367,387 vehicles.
By comparison, GM in the second quarter sold 122,432 Silverado pickups and FCA sold 117,448 Ram pickups.
The highly profitable F-Series franchise provides the core revenue stream for Ford, which has led the segment for decades. F-150 prices can start at $28,745 and exceed $75,000 with, as Ford executives like to say, “all the bells and whistles.” The average cost of the F-Series is $51,585.
“As America’s truck leader, retail F-Series pickup sales were off only 2%,” Ford said. “With more than 33% of the retail full-size segment, F-Series expands its lead as America’s bestselling pickup.”
Toward the second part of the sales period, Ford already began to see an uptick in government and commercial sales of the F-Series, including the Police Interceptor, LaNeve said. While sales overall were down, he noted that Ford grew its hold on the pickup segment.
The 2021 F-150 was revealed June 25 and is expected to be at dealerships later this year.
“Ford’s sales performance was a bit better than we had anticipated for June,” Michelle Krebs, executive analyst at Autotrader said. “We forecasted Ford would be down 34%; it was down 28%, on par with many other manufacturers. Our first-half forecast was spot on at down 24%.”
Much of Ford’s decline is due to the sell-down of products — mostly cars — that it is eliminating and significantly lower fleet sales for vehicles like trucks and vans, she explained. “On the plus side of Ford’s sales performance this year, the Ford Explorer is finally gaining traction, with sales up 15% in June.”
While the Ranger is a “big bright spot,” the Ford Escape — redesigned only a year or so ago — is underperforming, especially in comparison to segment leaders Toyota RAV4 and Honda CR-V, Krebs said.
“Lincoln is another bright spot with sales down a scant 1% in June, in a luxury market that is underperforming, and down only 8% for the first half,” she said. “Lincoln’s shift to SUVs has proven to be a smart one and supports Ford’s decision revealed yesterday that the Continental will drop from the line, except in China. Ford sold only 344 Continentals in the entire first half. No one will miss it.”