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Boeing executives concerned about stock-market decline

By David Bowermaster
Seattle Times aerospace reporter

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 today at the Farnborough Air Show. "We have been very concerned about Wall Street and the impact that will have on the consumer."

Two hours away from the market's closing today, the Dow Jones industrial average was off 52.55 points at 7,732.03, after having declined 235 points yesterday and about 1,500 points so far this month. 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 275 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 on by rampant ticket discounts, have kept several carriers from collapse.

That leisure travel could dry up as well, however, 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."

Boeing Commercial Airplanes Chief Executive Alan Mulally said at a morning briefing he believes deliveries will grow again in 2004, but his optimistic forecast came with several significant caveats.

"If the global economy starts to turn around at the end of this year and next year, and we keep the world safe and airlines start to get profitable again," then commercial aircraft production should turn higher, Mulally said.

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.

Stocks on the London Stock Exchange, known as the FTSE, closed at an almost six-year low today.

"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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