SEC filing indicates Boeing to ditch ugly duckling (717)

[mduell]

From The Boeing Company 2003 Annual Report:
(forgive my typos, I only have a print copy)

Due to ongoing market uncertainty for the 717 aircraft, the accounting quantity for the 717 program has been based on firm orders since the fourth quarter of 2001. THe 717 program accounting quantity was increased during 2003 due to the program obtaining additional firm orders. As of December 21, 2003, the majority of the remaining undelivered units of the 717 program consisted of 14 units to be delivered to a single customer. Due to the customer's uncertain financial condition, one a consolidated basis, these aircraft are accounted for as long-term operating leases as they are delivered. The value of the inventory for the undelivered aircraft as of December 31, 2003, remained realizeable.

We have possible material exposures related to the 717 program, principally attributable to termination costs that could result from a lack of market demand. During the fourth quarter of 2003, we lost a major sales campaign, thus increasing the possibility of program termination. Progam continuity is dependent on the outcome of the current sales campaigns. In the event of a program termination decision, current estimates indicate that we could recognize a pre-tax earnings change of approximately $400 million.

Speaking of program terminations, they ended production of the 757 in the third quarter of 2003.

[jetmech717]

I could care less what happens to the Boeing 717 program ( I mean its a good plane and I wish it well), but we already have ours! lol We only plan on getting a few more and thats not going to be hard with the few left-overs they have. Who knows maybe oneday Boeing will cut us a deal on a trade (although I hope not, only because I just went to 737-600/700/800/900 FAM class and it is amazing how far behind the 717 that the 737 is in technology). All because they couldn't change to much of the plane all at once for SouthWest to keep thier pilots type rated.

[haze]

Thanks for digging that up for me, I scanned through it several times but was just never able to put my finger on those statements. Similar to the "forward loss" statements a few posts back that I found in the Seattle Post-Intelligencer.

Whether sales for the b717 will pick up any steam with the air travel recovery remains to be seen. It's niche seems to be the short-haul feeder market, for which it is perfectly suited. Recent comments by AirTran management indicate their intentions to utilize the b717 in just that manner. The Star Alliance headed up by Lufthansa is also considering the b717 for it's commuter role, but many airlines within that alliance have already settled on Embraer and Bombardier models. Not sure if the final Star Alliance decision has been made yet, but with head hancho Lufthanso still eyeing the b717 Boeing can hope. There are a lot of "if's" in Boeing's forward loss statements, and the next two years will be critical in determining if a market for the 717 ever materializes.

But like jetmech717 said, AirTran already has their b717s which is reaping huge benefits costwise. Whether the aircraft is discontinued or not depends on an air travel recovery, but regardless the 717 already is and will continue to serve AirTran very well. I'd hate to see the spunky b717 go the way of the MD-11, but the heart of AirTran will soon be the 737-7/8 anyway so that's their future. The b717 will still be AirTran's spirited regional yet for many years to come.

Yes, some of us have already been discussing the 757 termination on another thread of the message board. With Boeing's current focus on the 7E7, the 767 is probably not too far behind. Boeing's statements have indicated that the 7E7 is intended to replace the 757 and 767 and compete with the Airbus A330 family.

Thanks again

[haze]

...of course, the 767 will probably enjoy a long run as the Air Force's next generation aerial refueler...

[haze]

I tried to assure dbaker this was still going to happen, but he condescended that I just didn't realize that Boeing's filing demonstrated their desire to back out of the 717-2 agreement with AirTran. I'm confident that everyone here can decide for themselves from now on who's in the know and who isn't

AirTran Airways Announces Order for Six Boeing 717 Aircraft
Source: Comtex News Network (Business Wire)

AirTran Airways, a subsidiary of AirTran Holdings, Inc. (NYSE:AAI), today announced that the airline has finalized an agreement for six more Boeing 717 airplanes to be delivered in 2005. The six aircraft represent the exercise of four options and firm orders for two additional aircraft, and the announcement comes only a few weeks before AirTran Airways accepts delivery of the first of 100 new Boeing 737-700 aircraft. AirTran Airways already operates the youngest all-Boeing fleet in the United States, currently flying 76 Boeing 717s with an average age of three years.

"The Boeing 717 is the cornerstone of our operation," said Joe Leonard, AirTran Airways' chairman and chief executive officer. "Since we became the launch customer for this aircraft, the 717 has delivered unparalleled efficiency, reliability, maintenance and fuel cost advantages," he added.

"The Boeing 717 is a proven market development aircraft. We're confident that these new aircraft will produce consistent operating results, building on the efficiency and reliability of our fleet, thus reducing our costs and allowing us to pass the savings on to our customers," said Robert L. Fornaro, president and chief operating officer. He added, "In fact we estimate the Boeing 717 to be 24 percent more fuel efficient than our previous aircraft."

The Boeing 717-200 was designed specifically for short-haul, high-frequency routes and offers low acquisition, trip and maintenance costs. AirTran Airways' 717 aircraft accommodates 117 passengers and offers 12 Business Class seats, spacious EasyFit overhead bins and 100 percent fresh air circulated throughout the cabin. The 717's BR715 engine was specifically developed by Rolls Royce to make the quietest and most environmentally friendly airplane in its class while not compromising power.

"The numbers that AirTran Airways has achieved with the Boeing 717 speak for themselves. The airplane's reliability, environmental advantages and fuel efficiency are unmatched among aircraft in its class," said Jim Phillips, Boeing 717 vice president and general manager. "AirTran Airways was the 717's launch customer. They began seeing operational and financial improvements as soon as they introduced the 717 into the fleet. This is a dynamic partnership that will continue for years to come," he stated.

If you didn't think dbaker is severely biased, why else would he revel in the prospective demise of a particular aircraft model which has been an outstanding performer, and a Boeing product at that? Because AirTran's entire fleet is the new b717-2. Enough said

[haze]

Originally Posted by dbaker

Do you understand that Boeing is looking to get out of those agreements and not deliver more 717s?

No, I understand that those deliveries will happen

[mduell]

Originally Posted by haze

I tried to assure dbaker this was still going to happen, but he condescended that I just didn't realize that Boeing's filing demonstrated their desire to back out of the 717-2 agreement with AirTran. I'm confident that everyone here can decide for themselves from now on who's in the know and who isn't

If you didn't think dbaker is severely biased, why else would he revel in the prospective demise of a particular aircraft model which has been an outstanding performer, and a Boeing product at that? Because AirTran's entire fleet is the new b717-2. Enough said

Boeing's Annual Report (2003) says they have 14 717s to be delivered to a single customer. If AirTran is buying 6, then perhaps they did get out of the other 8.

[haze]

Originally Posted by mduell

Boeing's Annual Report (2003) says they have 14 717s to be delivered to a single customer. If AirTran is buying 6, then perhaps they did get out of the other 8.

That's quite possible