New Boeing Unit to Focus on Plane Modification

Boeing Co. launched a new unit Tuesday to build up the aircraft modification business of its troubled commercial plane group.

The unit, Boeing Airplane Services, will offer passenger-to-freighter conversions as well as retrofitting, avionics upgrades, interior reconfigurations, recovery and repair services, and performance improvements for all Boeing commercial models.

“We’re intent on increasing customer satisfaction while finding new opportunities for profitable growth for our company,” said Tom Schick, executive vice president of customer services for the commercial airplane group. “Boeing Airplane Services is a key piece of that strategy.”

Analysts said the move to focus more on after-market services makes sense but will have little impact on the commercial airplane division, which is still recovering from production snafus during the last two years that caused $3 billion in losses. The unit is expected to see $38 billion in revenue this year.

“I think this is good but just not that huge in the totality of the company,” said analyst Cai von Rumohr of Cowen & Co. in Boston.

The unit will start with a staff of 1,600 in Long Beach, Wichita, Kan., and the Seattle area, and will add about 600 workers by the end of the year, spokesman Sean O’Donnell said.

Although those numbers will do little to counter the tens of thousands of workers being laid off in Boeing’s commercial airplane division, O’Donnell said that as a growth business, services is a bright spot.

Union leaders at Boeing complain that while efficiency gains are helping the company increase jobs in small numbers in a few areas such as services, they have helped Boeing significantly accelerate its timetable for cutting jobs elsewhere.

O’Donnell said the new service organization will start with 500 engineers in Long Beach. Currently, the engineers are involved in a project to convert the three-person cockpits in Federal Express’ DC-10s to two-person cockpits. Also based in Long Beach is a service that repairs McDonnell Douglas planes worldwide.

It is unclear how many jobs will be created in Long Beach as Boeing goes after the business of helping to remodel the 10,000 or so planes now in service. The company estimates that as the planes age, as many as 1,500 of them in the next 20 years will be converted to freight planes.

Shares of Seattle-based Boeing rose $1.56 to close at $36.25 on the New York Stock Exchange.