Boeing scraps 717 and takes $615m charge

Boeing is to end production of its smallest commercial airliner, the 717, and take a $615m (£430m) charge against profits, after failing to make inroads into the market for 100-seater jets.

Boeing is to end production of its smallest commercial airliner, the 717, and take a $615m (£430m) charge against profits, after failing to make inroads into the market for 100-seater jets.

The charge, which also covers increased costs connected with its bid for the US Air Force tanker refuelling programme, is expected to push the Chicago-based aerospace and defence group into a loss for the fourth quarter.

The closure of the 717 line in 2006 will cost Boeing $340m. The company has never managed to break the stranglehold over the small jet market held by Bombardier of Canada and Embraer of Brazil; Boeing delivered just a dozen 717s last year. Alan Mullaly, the president of Boeing commercial airplanes, said: "The overall market for the airplane does not support continuing 717 production beyond delivering on our current commitments."

The closure of the 717 line comes as Boeing faces a fresh threat at the top end of the airliner market, with the 555-seater Airbus A380 super-jumbo due to be rolled out next week.

Boeing has decided not to compete in this sector of the market, claiming there will be demand for fewer than 500 very large aircraft over the next 20 years. It is likely instead to develop a stretched version of its 747 jumbo.

The remaining $275m in charges is to meet higher production costs on the proposed military tanker contract. The US government cancelled the $23bn deal last year and put the contract out to tender again after it emerged that Boeing had won the order with the aid of a senior Pentagon procurement official, Darleen Druyun, who subsequently accepted a job with the company. She is now serving a jail term.