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March 29, 2010

Boeing Ramps Up Production of Passenger Jets

by Mil Arcega

U.S. aircraft manufacturer Boeing is boosting production of its large passenger jets to meet increasing demand as the airline industry recovers from recession.  Industry experts say demand will grow in 2010 after falling in 2008 and 2009.  But an aviation consultant says the optimism may be premature. 

After losing nearly $10 billion last year, the airline industry is poised for takeoff.

The International Air Transport Association, which represents 230 airlines around the world, predicts passenger demand will grow nearly 6 percent in 2010, while cargo demand is expected to see double digit growth.

In anticipation, U.S. aircraft maker Boeing is ramping up production of its wide body planes.  

That means increased work for Spirit Aerosystems, which builds the fuselage for Boeing's new 787 Dreamliner.   

Harold Leslie is a senior installation manager:

"We've brought on several new people since the first of the year," said Harold Leslie. "We continue to bring on new employees so it's good for the economy, it's good for Spirit, it's good for everybody."

But some are not so sure.

"That seems a bit premature to me," said Richard Aboulafia.

Aircraft consultant Richard Aboulafia says while air travel appears to be making a comeback, demand for first class tickets remains sluggish and airline revenues are well below 2008 peak levels.

"There's been a nice recovery since the horrible 2008, 2009 drop but we're still below where we were when the crisis began and all through that you had record output [production] of jetliners, so we've got this rather dangerous overcapacity situation," he said.

During the recession, many airlines canceled aircraft orders or grounded older planes as passenger demand declined.  Although the global economy is starting to turn around, some analysts worry the recovery could stall.

"And the more aggressive you get, the more likely you'll stumble and the more likely that that recovery from these false expectations will take that much longer," said Aboulafia.

Boeing plans to fast track production of its wide-body 777 and 747 jetliners.  

And France-based Airbus will boost production of its popular single aisle jets from 34 to 36 per month.