Boeing's 767 Finds New Life as a Freighter With $13 Billion Haul
(Bloomberg) -- Boeing Co. plans to boost 767 production -- and get a tidy profit bump -- as the aging jetliner gains new popularity as a midsize freighter favored by the likes of Amazon.com Inc. and FedEx Corp.
A rebound in the global air-cargo market spurred the decision to boost annual output 20 percent to 36 planes by 2020, Boeing said as it reported earnings Wednesday. That would be the third increase in the monthly production rate since early 2016 for the jetliner, which has an order backlog valued at $13.4 billion before customary discounts.
While best known for opening transcontinental travel to twin-engine jets in the 1980s, the 767 was supposed to be eclipsed by its replacement, the 787 Dreamliner. While demand for the passenger version has faded, the 767 is now enjoying a second act as a midrange package hauler and aerial refueler.
The freighter variant is the oldest model in Boeing’s current product lineup, dating to a 1993 order by United Parcel Service Inc. for 60 of the cargo jets. The first 767 freighter was delivered in October 1995. The company’s other freighters and passenger aircraft have since been updated.
Boeing has 63 unfilled commercial orders in backlog after delivering 136 of its 767-300 freighters, according to the company’s website. The planemaker also increased the accounting total for the aircraft by 24 aircraft during the first quarter, a bullish sign for sales.
And with the first of its KC-46 tankers approaching delivery to the U.S. Air Force under a $44 billion contract, the company is starting to scout for overseas orders for the military variant of the 767, said Boeing Chief Executive Officer Dennis Muilenburg.
“We’re going to be maintaining a very balanced approach on our production delivery schedules and our production rates,” Muilenburg said during the company’s earnings call. “But the fundamental strength in the freighter market is encouraging.”
Production of the 767 freighter slowed to a crawl this decade as Boeing marshaled resources behind the tanker, which is more than a year behind schedule. That provided an opening for Airbus SE, which is considering a freighter version of its slow-selling A330neo after discussions with Amazon and UPS, Bloomberg reported last month.
Boeing’s 767 may hold an edge in terms of costs and profitability, since tooling costs have long since been depreciated for the aircraft family, which debuted in 1982, said George Ferguson, an analyst with Bloomberg Intelligence.
“That’s an interesting story,” Ferguson said of the 767’s revival. “Something we’d all written off is back up to three aircraft a month.”
©2018 Bloomberg L.P.