Aircraft giants face big cuts in production

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The Independent Online
TWO big US producers of aircraft and aero-engines, Boeing and United Technologies, yesterday blamed poor 1992 results and expected redundancies on the financial problems of the world's airlines.

Boeing, whose fourth-quarter operating earnings fell to dollars 377m ( pounds 250m) from dollars 403m the year before, said it planned to make further cuts in production of most of its models because of new requests by airlines for delays in aircraft delivery schedules.

It said it had already rescheduled delivery to some buyers and was negotiating new delays with others.

It expected significant job losses as a result of the cutback in production, although numbers would not be available until it had reliable estimates of the airlines' needs.

Boeing now expects to produce about 340 passenger jets in 1993, compared with 441 last year, although new orders are expected to rebound to about dollars 26bn from dollars 17.6bn in 1992.

For the year, Boeing had an operating profit of dollars 1.6bn, compared with dollars 1.5bn in 1991. But Boeing's final profit for the year was only dollars 552m, after taking a one-off accounting charge of dollars 1.1bn to cover future costs of medical benefits for its retired workers.

United Technologies, meanwhile, announced plans to make another 12,000 employees redundant in the coming year, almost all of them in its Pratt & Whitney aircraft engine division.

By the end of 1994, the company will have almost halved its workforce from its 1990 levels of 50,000.

UTC lost dollars 333m in the final quarter of 1992, including a dollars 700m charge to cover credit losses to airlines and the costs of the restructuring. The year before, it lost dollars 1.2bn, after a dollars 1.5bn charge at the end of 1991 for restructuring and environmental clean-up costs.

For the year, the company eked out a dollars 35m operating profit, but lost dollars 287m after the fourth-quarter charges.

UTC's poor performance caused Moody's, the bond rating agency, to announce a review of the company credit rating. The agency said it was concerned with weakness in its engines business and with the growing dependence of airlines on manufacturers for financing their engine purchases.

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