Surplus Jets Sit at McDonnell’s Long Beach Site : Aerospace: Four unsold planes worth at least $120 million are on plant grounds. The firm has moved more jobs to Georgia, sources say.
McDonnell Douglas has parked at least $120 million worth of unsold aircraft at its Long Beach plant, indicating that the firm has surplus inventory even while it is sharply slowing production, industry sources said Wednesday.
The company has roughly nine MD-80 jetliners that are unpainted at various positions throughout the Long Beach plant. Four of those $30-million planes are unsold, which makes them known in the industry as “white tails.” The other five unpainted aircraft have committed customers, the industry sources said. The company declined comment.
Separately, McDonnell Douglas has quietly transferred between 300 and 500 jobs associated with the Air Force C-17 cargo jet from its Long Beach plant to Macon, Ga., according to three key sources at the plant.
The moves follow a presentation involving a high-level political delegation from Georgia that met at the Long Beach plant earlier this year.
So far, the firm has assigned the Macon plant assembly of a troop door, cargo floor, several bulkheads and other structures. The firm has moved several dozen C-17 subassembly tools, which are large iron jigs that hold parts together during assembly.
McDonnell has aggressively transferred jobs out of Southern California in recent years, setting up plants in Utah, Ohio and Georgia. A year ago, it moved assembly of the C-17’s cargo door and ramp, along with 1,000 to 2,000 jobs, to its St. Louis headquarters.
Meanwhile, the unsold MD-80s in Long Beach are an unwelcome cash flow burden, said PaineWebber analyst Jack Modzelewski.
“You can be sure this company is going through Herculean efforts to deliver airplanes and get paid,” he said.
Modzelewski noted that every aircraft is produced to fill specific orders, so a surplus indicates that airlines are declining to take delivery or canceling orders. Indeed, McDonnell has lost a net of 35 firm orders in the last five business quarters.
McDonnell has cut its MD-80 production rate to just 1.25 per week and will be going down to 1 a week. By next year, it expects to produce 45 of the planes, according to sources at the plant.
Craig Martin, spokesman for rival Boeing, said Boeing has no white tails, but has delayed delivery of three aircraft for customers with financing problems. “Our assumption is that in the near future they will be delivered,” Martin said.
