(Updates with analyst’s comments in fourth paragraph.)
Feb. 9 (Bloomberg) -- Boeing Co., after saying last month it will close its Wichita factory because of Pentagon budget constraints, said it will decide soon whether to shut the California plant where its C-17 military cargo plane is built.
There were orders for five C-17s as of Dec. 31, including three for the U.S. Air Force, and 19 “probable” purchases, Boeing said in a filing today. Without new orders, a decision this year to stop production in the future is “reasonably possible,” Chicago-based Boeing said.
The company is more optimistic now that India and the U.S. are closer to funding 15 of those purchases and the U.K. placed an order yesterday, extending production through the third quarter of 2014, said Cindy Anderson, a spokeswoman. Still the long lead times for some parts mean that a decision on the plant’s fate would have to be made this year, she said.
“Boeing has substantially reduced their risk by putting names on the tails of 15 of those airplanes in the first two months of this year,” said Howard Rubel, an analyst with Jefferies & Co. in New York who recommends buying Boeing shares and doesn’t own any. “Now they’ve got to go out and get another dozen orders to keep the line open even longer.”
Boeing last year reduced production at the Long Beach plant to 10 C-17s a year, from 15, to extend work as interest in the model dwindled.
Boeing, the second-largest defense contractor after Lockheed Martin Corp., gets 76 percent of its military-related revenue from the U.S. Defense Department, which is scaling back spending. The planemaker is trying to win more orders from abroad to boost international sales to 30 percent of the total.
--Editors: Niamh Ring, Bob Brennan
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