McDonnell Douglas to Make Commercial C-17

In an effort to avoid possible layoffs, McDonnell Douglas Corp. will clear the way for production of a commercial version of its popular C-17 military transport aircraft, even though it does not have any confirmed customers.

McDonnell Douglas decided to boost its production schedule by adding two planes to the eight C-17s it is already building this year for the Air Force as part of a seven-year, 80-plane contract. Those additional planes could ultimately become the first MD-17s for commercial customers who haul heavy machinery or packages around the world, said Rick Fuller, a spokesman for the company in Long Beach, where the planes are assembled.

They also could be sold or leased as C-17s to foreign governments, or delivered to the Air Force ahead of schedule. By 2000, the company will produce 15 C-17s per year for the Air Force.

“This will smooth out the transition from eight per year to 15 per year,” Fuller said Tuesday. Otherwise, McDonnell Douglas risks having to lay off an unspecified number of C-17 workers until there are more planes in the pipeline, he said.

Altogether, the C-17 program employs 8,500 people at McDonnell Douglas’ Long Beach site.

Although the features of an MD-17 would, in part, be determined by customer demands, the commercial planes would certainly be modified, Fuller said. The MD-17 would not be equipped for aerial refueling and would not have an on-board inert gas generator. The MD-17 would also be built without air drop capability and seats that are sometimes used by paratroopers, he said.

It is unusual--but not unheard of--for aircraft manufacturers to start building planes without intended customers. McDonnell Douglas has been mulling over a commercial version of the C-17 for a few years, but the decision to build the extra planes was made recently. This will allow the company to fill an MD-17 order more quickly in the event that one comes in.

Analysts said the plan--which they estimated would cost a few hundred million dollars--was a reasonable trade-off of risk and potential reward.

“They are trying to market this airplane fairly aggressively in Europe and elsewhere, and it’s very helpful to have a couple of demonstrators right on hand,” said Wolfgang Demisch, an aerospace analyst with BT Securities in New York.

McDonnell Douglas already makes a commercial cargo plane, the MD-11, and its intended merger partner, Seattle-based Boeing Co., produces cargo versions of its 737, 747, 757 and 767 passenger airplanes. Lockheed Martin Corp. of Bethesda, Md., also makes a commercial cargo plane, the comparatively small C-130.