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Boeing fears effects of market on sales

By David Bowermaster
Seattle Times aerospace reporter

LONDON — The threat of a prolonged stock-market decline that erodes consumer confidence and further dampens air travel has become a major concern inside Boeing Commercial Airplanes, according to Randy Baseler, vice president of marketing.

"The last few weeks in the stock market have put up a caution flag for us," Baseler said yesterday at the Farnborough Air Show. "We have been very concerned about Wall Street and the impact that will have on the consumer."

The Dow Jones industrial average fell 82 points yesterday after tumbling 235 points Monday. The Dow industrials have lost more than 1,500 points in July.

Less travel would mean lower revenues and deeper losses for Boeing's airline customers. U.S. airlines are expected to lose more than $4 billion this year after shedding more than $7 billion in 2001.

If global airlines' situation worsens, Boeing could have trouble meeting its targets of delivering 380 planes this year and up to 300 in 2003, and it would almost certainly derail the recovery in production Boeing has forecast for 2004.

A large part of the airline industry's financial distress since Sept. 11 has been due to a severe drop in lucrative business travel. Healthy doses of leisure travel, spurred by rampant ticket discounts, have kept several carriers from collapse.

That leisure travel could dry up as well if consumers begin to worry that their dwindling 401(k) funds and other investments are not going to rebound soon.

Baseler said that barring a "complete disaster," such as another terrorist attack, Boeing should hit its delivery targets.

But, he added, "The next few months are really critical for whether we stay on track."

Baseler said Boeing's concerns about the psychology of consumers extends to many parts of the world, where stock markets are performing as poorly as in the U.S. The London Stock Exchange's benchmark index, known as the FTSE, closed at almost a six-year low yesterday.

The FTSE and all the other (stock markets) are following Wall Street, Baseler said. "That's our biggest concern right now."

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