Update, February 27: Just kidding—
Curtis-Wright tells us their officials [m]ucked up and there is nothing to support the statements reported below, as extracted from their year-end 2008 earnings call. CW has no information regarding a rate reduction by Boeing this year.
What is especially troubling here is that CW did not put out a public statement correcting their error. Although CW followed up with calls to the aerospace analysts, the common shareholders of CW, Boeing and other suppliers relied on the earnings call and the transcript to make investment decisions. The failure of CW to make a public correction of this material error is highly irresponsible.
Boeing supplier Curtiss-Wright plans to provide Boeing with only 21.5 737 shipsets per month by the end of the year, from the current level of 31 a month.
The revelation was contained in the CW earnings call of February 18 and overlooked by the Boeing-focused media. (We were just returning from our submarine venture in the Atlantic and are only now catching up.)
Here is what CW said in its 2009 forecast:
In our commercial market, we expect to be flat. Commercial aerospace, we see flat shipments to Boeing year-over-year, because last year we shipped about 305 737s and we looked at commercial aerospace from a Boeing side, surely the 737 that drives our revenues and last year because of the strike, we shipped about 305. This year, we’re anticipating shipping around 315 and we expect the beginning of the year to be at 31 ship-sets a month for the first six months, and it then goes down to about 21.5 ship-sets for the last six months and we expect Airbus to be down.
The company added, in a response to a question:
Well, on the 737, we’re expecting that they’re going to cut back mid-year. In reality, we are producing that, that 21.5 ship-set a month right now. Because we had inventory that we built up during the strike. Obviously, while Boeing was on strike, we kept our workforce and continue to build 737s. So we are on a production rate right now and obviously if it was to stay at 31 longer than that, we can easily increase our production to meet that need. But that’s our forecast right now.
This is significant. Boeing, on its 2008 earnings call, said it expected 2009 production to be flat. At a subsequent investors’ conference, Boeing Commercial Airplanes President Scott Carson strongly suggested there would be a 10% production cut in 2010, with a decision coming in May. In an analysis we did, we figured a 15% production cut for the 737 line to perhaps 26 a month–all forecast for 2010. The CW internal planning represents a 32% cut by the end of this year.
The full CW transcript may be found here.
Update, Feb. 26: The Everett Herald has a response from Boeing that may be found here.