Plane market robust, CEOs say

Sept. 12, 2007
Next downturn in the aerospace industry may be more of a dip than a steep decline

Sep. 12--With demand for airliners soaring, the next downturn in the aerospace industry may be more of a dip than a steep decline, Spirit AeroSystems' top official said Tuesday.

"If it did cool a little bit, I don't think you'd see a meteoric drop" in orders, said Spirit chairman and chief executive Jeff Turner.

The case for an extended positive cycle is strong, Boeing chief executive Jim McNerney said.

McNerney and Turner spoke to analysts during a Morgan Stanley conference in Dana Point, Calif., which was broadcast on the Internet.

McNerney and Turner pointed to several factors for continued demand.

Airplanes are full. Orders are exceeding deliveries. Fuel prices are high, creating demand for fuel-efficient aircraft. Global economies are growing. And the last downturn created pent-up demand for new airliners.

Turner was confident that the next aviation downturn, whenever it may come, wouldn't likely lead to wholesale layoffs, as has happened before.

The company is being careful not to overhire, he said. Turner also hinted that Spirit could employ a three-day workweek, which it did when Machinists at Boeing, its biggest customer, went on strike in September 2005, if demand for airliners stalls.

The two also gave analysts an update on the 787 program.

McNerney said Boeing would still be able to deliver the first 787 on schedule in May 2008. The first flight, originally scheduled for August, is now expected in mid-November or mid-December because of delays in final assembly and with flight-control software.

That leaves Boeing with only five to six months between first flight and certification.

"The FAA has looked at this plan and supports it," McNerney said.

Extra margins have been built into the test plans, but those margins have been eliminated, he said.

"Is there room for major glitches at this stage? The answer is no. We're tight," McNerney said.

The test flight program will use three shifts, 34 test pilots and two engine types, compared with three engine types on the 777, he said.

Turner said he is pleased with Spirit's performance in its role in the 787.

Spirit builds the plane's forward fuselage and pylons in Wichita. It has 10 nose sections on the production line.

The first nose section delivered to Boeing did not include all the systems, but Spirit will "stuff" future nose sections with the systems and wiring before shipping.

In retrospect, Turner said he may have had the 787 team work on the systems plans sooner.

"I'm not happy with where we are in the full integration of the systems we have to put in the structure," Turner said.

Boeing has changed the sequence of when the fuselage sections of the second flight-test aircraft are to be delivered from the suppliers.

Instead of sending sections for the second plane, Boeing asked suppliers to ship sections for a plane to be used for fatigue testing. The change gives suppliers, including Spirit, extra time to work on the second units.