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Boeing Order May Boost State Economy

Posted on: Friday, 16 December 2005, 15:00 CST

By AP, The Columbian

The Boeing Co., Washington's largest private employer, has won a contract from Australia's Qantas Airways that further brightens the company's long-range business outlook and will likely boost the state's economy.

Qantas announced plans Wednesday to order up to 115 of Boeing's new 787 passenger jets in a deal that could net Boeing almost $15 billion and land a heavy blow in the aircraft builder's battle with rival Airbus.

For Boeing's 62,103 Washington state employees, the news couldn't be better.

"To put it in perspective, in all of 2004 Boeing received just 277 aircraft orders compared to orders for 800 planes this year," said Portland economist John Mitchell. "Washington's aerospace industry is on an upswing that has years to run."

That upswing affects plants in the Puget Sound area, where Boeing will assemble the 787s; in Spokane, where competitor Airbus operates a former Boeing plant; and in Gresham, Ore., where Boeing employs 1,150 workers making aircraft parts.

Qantas Airways Ltd. chief executive Geoff Dixon described the Boeing order as "a very, very big commitment to growth, negotiated through an extremely competitive contract."

Boeing's list price for the 787 is $130 million, making the first 45-plane order worth $5.85 billion.

The Chicago-based company, which does not count options or purchase agreements toward the list-price value of its plane orders, said it was finalizing an agreement for 45 planes, with options for 20 more, plus purchase rights for an additional 50.

Qantas said it will start taking delivery of the 787s in 2008.

"Our relationship with Qantas dates to the very start of the jet age, and we're thrilled to see that relationship continue with the 787," said Alan R. Mulally, president and chief executive of Boeing Commercial Airplanes.

The announcement was a blow to Boeing's European rival, Airbus, which had also been lobbying Qantas to buy its planes.

Airbus spokesman David Voskuhl expressed disappointment with the Qantas decision to buy the 787 but said the "flagship of their fleet" would be the A380.

"We respect the airline's decision," Voskuhl said. "We would certainly have liked to win, but they have decided in favor of the 787, and we would certainly not criticize that."

The Airbus A350, a planned long-range competitor to the 787 "Dreamliner," is set to enter service in 2010, two years after the Boeing plane. Neither Qantas nor the rival aircraft makers indicated whether delivery schedules were an important factor in the decision.

Investors approved of the announcement, sending Boeing stock upward on Wednesday to a 52-week high of $71.45, up 86 cents on the day. Qantas stock soared 3.2 percent to close at $2.91.

"This is part of a series of very positive things for Washington's economy after more than five years of downturn in the aerospace industry," Mitchell said.

Boeing and its suppliers began shedding jobs in 1998 with an estimated 50,000 workers cut from payrolls over the ensuing five years. Boeing employment bottomed out at about 52,000.

"The turnaround started last year," Mitchell said. "The Qantas order says it's going to keep on going. And while the aerospace industry is not as large a component for the region's economy as it once was, it's no longer a drag. You're adding people."

Source: Columbian

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