Overseas deals lift Boeing's bottom line
But the plane manufacturer is still planning major layoffs by the end of the year.
After weeks of high-profile headlines and negative publicity associated with its 787 Dreamliner, things may finally be looking up for Boeing (BA) – which has several big deals in the works.
According to Reuters, Philippine Airlines is considering the purchase of 20 wide-body 777X jets. The 777X is an upgrade on Boeing's current 777 model, designed for long-range flights.
The airline, owned by Philippine conglomerate San Miguel Corp., signed a $7 billion order last year with Boeing's European rival, Airbus (EADSY). But any deal for the Boeing jets “depends on the price," said Philippine Airlines president Ramon Ang on Monday. "We are looking at the new Boeing 777X. We may buy 10 and, if it performs well, we'll exercise an option for 10 more.”
That news comes after word last week that the Irish discount airline Ryanair (RYAAY) also inked a deal with Boeing. One of world's wealthiest and largest airlines, Ryanair says it will buy 175 Boeing 737s. Neither side would disclose the purchasing price -- but according to The Associated Press, Ryanair CEO Michael O'Leary said the carrier did negotiate a bulk discount off the total list price of $15.6 billion.
On the other side of the world, Indonesia's Lion Air announced earlier this month a $24 billion deal to purchase a record 234 Airbus passenger jets. But Lion Air is also a major Boeing customer -- having finalized an order last year for 230 Boeing 737s, the company's biggest order ever at a list price of $22.4 billion, to be delivered starting next year and through 2026.
The common denominator for all these purchases appears to be the expansion of medium- to long-haul service in both Europe and East Asia, especially across the widespread islands of the Philippines and Indonesia, as Ryanair, Lion Air and Philippine Airlines all battle other regional and domestic carriers for passengers.
Yet even as the ink dries on billions of dollars of new orders, Boeing says it plans to lay off about 800 workers this year -- reportedly as work on its 787s and 747-8s winds down. The Puget Sound Business Journal says those job cuts are part of the up to 2,300 positions expected to be eliminated at the company, mostly through attrition and internal transfers.
Connie Kelliher, spokeswoman for the International Association of Machinists, tells the newspaper the layoffs are about productivity, and not diminished sales.
"This is not the start of a Boeing down-cycle," she said. "Unlike past layoffs, there are no production rate decreases on any airplane line. Production rates remain high, and there is a seven-year backlog."
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