Boeing CEO: 'Mystified' We Are Accused of Overproducing
Boeing CEO Jim McNerney denied commercial aviation was in a production bubble on Monday, shortly after closing a $7.2 billion deal with Air Lease.
Boeing sold 75 737 MAX to the U.S. aircraft leasing firm, who were first-time buyers of the narrow body jetliner.
“We have been accused over the last decade of lagging demand. I am a little bit mystified we now get accused of overproducing,” McNerney told CNBCat the Farnborough International Airshow. We have not seen any data yet that suggests we should slow down.”
He said Boeing had been “steadily” upping production rates over the last few years. Production rates for both the 737 and the 787 increased in the first quarter of 2012.
McNerney said demand for planes such as the 737 MAX existed because of a need to replace older technology. “It pays back very quickly,” he said.
He added that forecasting demand for aircrafts was comparatively simple. “It is half driven by technology replacement and half driven by GDP . The outlook is pretty steady.”
The U.S. is recovering “better than is often portrayed,” he said, but problems regarding debt , entitlement and tax still needed to be dealt with. “These are issues that if properly solved could have an impact on Boeing.”
He warned that defense spending in the U.S. will be cut “dramatically” and said that both the Republicans and the Democrats are “paralyzed” over taking action to prevent this.
Boeing will release its second quarter earnings on July 25. First quarter revenue was $19.4 billion with earnings per share at $1.22.
To watch Boeing CEO Jim McNerney speak to CNBC, click here.
To watch Air Lease CEO Steve Udvar-Hazy speak to CNBC, click here.
To read more about Farnborough International Airshow 2012, click here.
— By CNBC.com's Katy Barnato