Boeing CEO sees 'flattish' sales, profit rise in 2017
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The logo of Boeing (BA) is seen in Los Angeles, California, United States, April 22, 2016. REUTERS/Lucy Nicholson/File Photo
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By Alwyn Scott
NEW YORK (Reuters) - Boeing Co's (NYSE: BA) chief executive sounded a new note of caution on Wednesday, saying the world's biggest plane maker would post "flattish" sales next year, even as profit and cash flow rise.
Dennis Muilenburg said Boeing also might miss its target of selling about 740 jetliners this year, having booked just 355 net orders so far.
Airlines have cooled on buying new planes, especially large twin-aisle models, and some analysts had already factored a sales miss into their forecasts.
While Boeing is still aiming for its target, "there's nothing that's driving us with a sense of urgency that we have to hit" it, Muilenburg said at an investor conference hosted by Morgan Stanley.
Boeing's near-record backlog of about 5,700 plane orders will keep the factories humming, and Boeing will not cut prices just to generate sales, he said.
Still, Muilenburg said Boeing may cut production of 777 jets further than its current projections if sales of the twin aisle model continue to lag. The 777, one of Boeing's most successful and profitable planes, is undergoing a makeover that will add new engines and wings and other refinements.
Boeing makes 777s at a rate of 8.3 a month, and had already announced plans to cut output to seven a month next year as it shifts to the new 777X model, which enters production in 2018.
But Boeing has sold just eight 777s this year, far short of the 40 to 50 needed to sustain production at those levels.
"So, obviously, pressure there," Muilenburg said. "We need to be successful on some (777 sales) campaigns over the next two to three months to hold that seven-a-month rate," he said. "If we don't, we'll have to adjust."
Cutting 777 production would "add pressure" to Boeing's goal of hitting its profit-margin target and would reduce revenue, Muilenburg said. But Boeing's ramp up in production of single-aisle 737s, also very profitable, would offset the decline.
Defense sales also are expected to be "flattish" next year, he said. But there are signs that U.S. defense spending could rise, and "strong pockets of growth" in Middle East and Asia Pacific regions could help.
Cost cutting and streamlining across all of Boeing and its supply chain, and rising deliveries, should keep profits and cash flow rising, he said.
(Reporting by Alwyn Scott; Editing by Chris Reese, Will Dunham and Bernard Orr)
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