WTO found $3 billion-$4 billion in illegal subsidies for Boeing: USTR

WASHINGTON , Mon Mar 12, 2012 – The World Trade Organization has ruled that aircraft manufacturer Boeing received $3 billion to $4 billion in illegal subsidies in the form of federal research grants and local tax breaks, the top trade official said on Monday.

But Trade Representative Ron Kirk called the decision “a tremendous victory” for the United States because he said a separate WTO panel ruled last year that European governments provided $18 billion in subsidized funding for Airbus.

“It is now clear that European subsidies to Airbus are far larger – by multiples – and far more distortive than anything that the United States does for Boeing,” Kirk said in a statement.

“The United States is ready to address all of the WTO findings, and we expect Europe to do the same. Airbus is a mature, highly capable company with ready access to commercial financing. It doesn’t need the launch aid that European governments are continuing to provide,” he added.

The WTO appellate body ruling on Monday faulted the United States for research funded by NASA and the Department of Defense that benefited Boeing and for tax breaks granted by the state of Washington and city of Wichita, Kansas.

The United States will have six months to comply with the ruling, once it is formally adopted this month, Kirk said.

Boeing signs record $22.4 billion commercial order with Lion Air

CHICAGO – Boeing Co said on Tuesday it signed its largest ever commercial airplane order with Indonesia’s Lion Air in a deal worth $22.4 billion.

Boeing said Lion Air, Indonesia’s largest carrier by passenger volume, has ordered 230 airplanes, including 201 737 MAXs and 29 next-generation 737-900 ERs.

Lion Air will also acquire purchase rights for an additional 150 airplanes, Boeing said.

The announcement was made in a statement at the Singapore airshow.

In November, Lion Air announced the original massive order during U.S. President Barack Obama’s Asia-Pacific tour. Europe’s Airbus had accused the United States of applying political pressure to secure the deal.

After ‘lemming’ exodus, manufacturers look to U.S

WASHINGTON – Big manufacturers moved their production out of the country too quickly over the past decades and now see a competitive advantage in building up their footprints back home, top executives said on Monday.

The chase for lower-paid workers drove the migration, which resulted in employment in the U.S. manufacturing sector falling by 40 percent from its 1980 peak. But big companies including Boeing Co. and General Electric Co. are now finding that the benefit of lower wages can be offset by higher logistics and materials costs.

“We, lemming-like, over the last 15 years extended our supply chains a little too far globally in the name of low cost,” said Jim McNerney, CEO of world No. 2 planemaker Boeing. “We lost control in some cases over quality and service when we did that, we underestimated in some cases the value of our workers back here.”

Boeing in particular ran into extensive delays in the launch of its 787 Dreamliner aircraft, handing off much of the manufacturing responsibility to outside suppliers, leaving the launch of the fuel-efficient aircraft some three years behind schedule.

“You are going to see more (manufacturing) come back to the United States, and that’s in part for business reasons and in part because we want to be good citizens,” McNerney said.

McNerney spoke at a Washington event organized by GE aimed at promoting the competitiveness of the U.S. economy. The nation has been slow to recover from a brutal 2007-2009 downturn and high unemployment – 8.3 percent in January – stands as one of the main barriers to a brisker recovery.

Boeing to correct 787 Dreamliner fuselage issue

SEATTLE – Boeing has discovered a problem related to the aft fuselage of its 787 Dreamliner planes and is making repairs that will not affect production of the aircraft, the company said in an emailed statement on Sunday.

The 787 Dreamliner is a light-weight, fuel-efficient, carbon-composite aircraft. It was three years behind its development schedule but finally entered service last year.

“Boeing has found that incorrect shimming was performed on support structure on the aft fuselage of some 787s,” Boeing spokesman Scott Lefeber said.

Lefeber added, “We do not expect that it will affect our planned product rate increases,” and that there are no short-term safety concerns.

Boeing aims to ramp up monthly production on the airplane to 10 by the end of 2013. Some experts believe the target rate is too ambitious, but Boeing is standing by it.

Lefeber declined to identify how many aircraft were affected.

The news was first reported by the aviation website Flightglobal.

Boeing says it will close a Wichita plant by end of 2013

SEATTLE ―¸ Boeing Co. said it would close a Defense, Space & Security facility that employees more than 2,160 workers in Wichita by the end of 2013.

The plant is the base for the company’s Global Transport & Executive Systems business and its B-52 and 767 International Tanker programs.

Boeing said in a statement that the site does not have enough sustainable business on the horizon to create an affordable cost structure to maintain and generate new business.

“In this time of defense budget reductions, as well as shifting customer priorities, Boeing has decided to close its operations in Wichita to reduce costs, increase efficiencies, and drive competitiveness,” said Mark Bass, vice president and general manager for BDS’ Maintenance, Modifications & Upgrades division in the statement.

Bass said Boeing does not anticipate job reductions as a result of this decision until early in the third quarter of 2012.

Boeing announced the decision after completing a study of the plant. The plane maker’s defense business has about 64,000 workers.

Boeing shares were down 17 cents, or 0.2 percent, at $74.05 on the New York Stock Exchange.

Aerospace 2012 sales seen slowing, trade group chief says

WASHINGTON ― An eight-year growth spurt for the U.S. aerospace industry appears set to end in 2012, the industry’s chief trade group said Wednesday.

Sales are expected to have risen 3.6 percent this year to $218.1 billion from $210.6 billion in 2010, marking the eighth straight year of growth despite sluggish markets worldwide, the Aerospace Industries Association said.

But sales are projected to ebb 0.2 percent to $217.7 billion in 2012, it added in an annual year-end review and forecast.

The outlook for growth is “positive in commercial aerospace and neutral in the defense sector,” said the group, whose members include Lockheed Martin Corp., Boeing Co., Northrop Grumman Corp. and Raytheon Co.

Both the commercial and military sectors remain vulnerable to numerous variables that are capable of overturning current expectations and trends, it said.

Among these are planned U.S. military spending cuts as part of federal deficit reduction efforts.

“However, rising commercial aircraft sales (up 7.5 percent year over year through September 2011) could offset these drags on the market and may spur the commercial aviation sector to increase capital spending on new equipment,” the association said.

Aerospace exports are expected to have risen to nearly $90 billion in 2011, up 12 percent after having fallen for two years, the report said.

Boeing logs big order from Southwest for fuel-efficient planes

(Reuters) – Boeing Co. bagged its first firm order for the new 737 MAX fuel-efficient, narrowbody plane, as part of a $19 billion deal with Southwest Airlines that the jet maker calls its largest order ever.

The order for 208 narrowbody planes includes 150 MAX aircraft and puts Southwest, a loyal Boeing customer, first in line to take delivery of the upcoming revamp of the best-selling 737, which will feature a new energy-efficient engine.

The order reflects robust demand for fuel-efficient planes as the airline industry struggles to rebound from a painful downturn and cope with volatile oil prices. The Southwest deal is also one of the last major aircraft orders up for grabs from U.S. carriers looking to replace aging models.

“It’s been a very good year for orders, really driven by the re-engined platforms for Airbus and Boeing,” said Peter Arment, an aerospace and defense analyst with Sterne, Agee & Leach. “We do expect that to continue in 2012.”

He said Boeing would likely garner more orders for its 737 MAX from existing customers, and noted the company was currently competing with chief rival Airbus for an order from United Continental Holdings, the world’s largest carrier.

Delta Air Lines ordered 737-900ER 100 Next-Generation extended-range 737 planes in August, following a giant order in July from now-bankrupt American Airlines for 460 single-aisle jets worth up to $40 billion, an order Boeing split with Airbus.

The MAX orders, combined with a strong existing backlog for other 737 models, will allow Boeing to raise production rates to record levels on one of its most profitable plane programs, Arment said.

“Longer term, it’s going to help generate some additional earnings power for the company,” Arment added.

Boeing reported commitments for 948 MAX airplanes and said the figure could climb to 1,500 by the end of next year. It said the Southwest deal was its largest firm order ever in dollar value and the number of airplanes.

Private Indonesian carrier Lion Air last month placed an order for 230 planes, including 201 of the MAX that Boeing said at that time was its largest order, but those orders were not firm.

“It truly is Christmas come early for the Boeing Co,” Jim Albaugh, Boeing’s chief executive for commercial planes, told a press briefing held in Dallas to announce the Southwest order.

Boeing sees AMR bankruptcy as positive long-term

SEATTLE ― American Airlines’ bankruptcy restructuring should make the carrier more profitable and able to purchase more aircraft, the head of Boeing Co’s. commercial airplane division said on Wednesday.

Speaking at a Credit Suisse aerospace and defense conference in New York, Jim Albaugh said the bankruptcy filing by the AMR Corp. unit would give the carrier long-term stability. But in the short term, American may ask to restructure some aircraft leases, he said.

“Taking a long-term view, the American bankruptcy is a very positive thing for them and a very positive thing for us,” Albaugh said. “By going through a restructuring, they’re going to come out of it a very competitive airline.”

American is the third-largest U.S. airline. The company. which suffers from higher labor costs than its peers, filed for Chapter 11 on Tuesday.

This year the carrier placed a giant split order for 460 single-aisle jets worth up to $40 billion with Boeing and its European rival Airbus EADS.

Bankruptcy could jeopardize parts of the order that are not yet firm. On Tuesday, AMR CEO Tom Horton called the order “rock solid.”

Boeing defense CEO: braced for deep spending cut over 10 years

SEATTLE ―Boeing Co’s. defense unit is bracing for the “worst case scenario” — a trillion-dollar U.S. defense budget reduction over 10 years, the chief executive of the company’s Defense Space and Security business said on Thursday.

Speaking on a webcast of a Bank of America Merrill Lynch forum, Dennis Muilenburg said the company must be realistic about the budget outlook.

“Now from an operational standpoint, productivity standpoint, we are assuming that worst case scenario,” Muilenburg said. “So we are designing our cost structure to accommodate a trillion-dollar budget reduction.”

The congressional panel created over the summer as part of the U.S. agreement to raise the debt ceiling must recommend $1.2 trillion in spending cuts later this month. If it fails to reach a deal, automatic cuts of that amount would kick in, to be split equally between defense and non-defense programs.

That would force the U.S. Defense Department to take steeper additional cuts on top of the $350 billion in spending reductions it has already set over the next decade.

Defense contractors are reducing headcount and shedding non-core units in preparation for leaner global budgets.

Boeing, which splits its business between defense products and commercial airplanes, believes that while defense spending is shrinking in the United States, opportunities remain in international markets, Muilenburg said.

He said he sees especially strong budget growth in the Middle East and Asia Pacific regions.

“We like the position of our portfolio in that tough environment,” he said, noting a backlog worth $59 billion for the Defense, Space & Security unit.

Shares of Boeing were up 0.6 percent to $64.93 on the New York Stock Exchange.

Boeing delivers 127 commercial planes in third quarter

SEATTLE ― Boeing Co. Thursday said it delivered 127 commercial airplanes in the third quarter including 100 of its best-selling 737 narrowbodies and 21 widebody 777s.

The number of deliveries, which include the first 787 Dreamliner, were up slightly from the 124 reported for the year-ago quarter.

Boeing, the world’s second-largest commercial airplane maker after EADS unit Airbus, gets paid for airplanes at delivery. The company is due to report third-quarter financial results on Oct. 26.

In its weekly order book update, Boeing said it took a new order for one 777 from an unidentified customer. On Wednesday, Boeing said Ethiopian airlines had ordered four Boeing 777 Freighters, with a list value of about $1.1 billion.

Shares of Boeing, a Dow component, were up 2.8 percent at $61.63 at midday on Thursday.