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Boeing CEO sees profits
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September 25, 2001: 10:21 a.m. ET
Condit says company can ride out prolonged slump in airliner demand
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NEW YORK (CNNfn) - Boeing Co. CEO Phil Condit expects the aircraft maker to remain profitable despite the sharp decline in demand for new aircraft in the wake of this month's terrorist attack, according to a published report.
The Wall Street Journal reported Tuesday that Condit said the current slump in demand is likely to continue more than a year, but the company believes it can continue to make money during this period.
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Phil Condit
Boeing CEO says aircraft maker should stay profitable despite slump in demand. | |
"Right now, if I had to bet, I'd bet it takes longer (than a year) because this time what happened was closer to home," he told the paper, speaking of the downturn in demand for air travel and new aircraft. "You have to be realistic, you can't go whistling along hoping it gets better."
The paper said he defended the company's announcement last week that it would cut 20,000 to 30,000 employees from its commercial aircraft unit due to the drop in demand.
"I've heard from people questioning our patriotism, but we have a fundamental responsibility to keep this company healthy so it can be there later on," he said. "If you are building $200 million airplanes that nobody wants to buy, you can get into financial trouble really fast."
Joseph Nadol, analyst with J.P. Morgan Chase & Co., told CNNfn that it is extremely difficult to get a handle on Boeing's profitability outlook. He said the slump in new aircraft orders that occurred during the Gulf War in late 1990 and early 1991 lasted until the middle of the decade, even though air travel recovered relatively quickly.
"Once there's a glut of aircraft it takes quite a while to work through the glut and for demand for new aircraft," he said.
Nadol said Boeing could see more gains on its defense business than it did in the wake of the Gulf War due to the very different nature of the current military effort, which President Bush has warned will take years to wage.
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"When the Gulf War happened, spending fell immediately thereafter. You had collapse of communism, and the need for budget cuts," said Nadol. "Now the budget is heavily in surplus, and the public is crying out for protection. I think you'll have sustained increase in defense spending." 
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Boeing Company
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