Boeing to Terminate Production of 757 Jet

Boeing Co., struggling to sell commercial aircraft amid a severe industry downturn, said Thursday that it would stop making the 757 jetliner, which helped bring nonstop, coast-to-coast travel to many regional airports.

The announcement, which had been anticipated, comes as the company considers developing a super-fuel-efficient commercial jet dubbed the 7E7. Analysts said the move could bolster prospects for the 7E7, which would fill a gap in the mid-range market created by the closing of the 757 production line.

Orders for the 757, assembled in Renton, Wash., have been dwindling since the Sept. 11, 2001, terrorist attacks, which slowed air travel and prompted airlines to cancel or delay orders.

Boeing recently lined up orders for five of the twin-engine, single-aisle passenger planes from Shanghai Airlines of China. But other customers have canceled orders.

The move to terminate 757 production could mean Boeing’s other poor-selling jetliner, the 717, is in jeopardy. The 717, which is produced in Long Beach, has had difficulty drawing buyers, analysts said.

“The 717 could be next on the hit list,” said Richard Aboulafia, analyst for the aerospace research firm Teal Group, who noted that the 717 had fared far worse than the 200-passenger 757.

Boeing has sold only about 150 of the 120-seat 717s; more than 1,000 757s have been produced.

About 3,000 people work on the 717 program, the last commercial aircraft production line in Southern California.

Just hours before Chicago-based Boeing made the announcement about the 757, Continental Airlines Inc. said it was converting orders for six 757s to less expensive 737-800 jetliners. Though it is smaller, the 737-800 has a range similar to the 757’s and has increased in popularity with airlines amid their reduced passenger traffic.

“This decision reflects the market reality for the 757,” said Alan Mulally, president of Boeing’s commercial airplanes business, who was on the aircraft’s design team in the late 1970s. Closing down the production line, which will occur in late 2004, will produce a pretax charge against third-quarter earnings of $184 million, or 14 cents a share, Boeing said.

Boeing’s stock closed up 45 cents at $37.45 Thursday on the New York Stock Exchange.