Boeing plans to build 767s faster as air freight market rebounds

Key Points
  • Boeing plans to ramp up production of Boeing 767s in 2020.
  • Air cargo has been a boon to commercial airlines and freight companies.
  • A strong economy and growth of e-commerce has helped lift demand.
Boeing improving business is a path to higher prices, says analyst
Boeing improving business is a path to higher prices, says analyst

Boeing is planning for more gains in the air freight market. The aerospace giant on Wednesday said it will increase production of 767 planes from 2.5 to 3 a month starting in 2020.

"We do see long-term strength in the (air cargo) market," Boeing's CEO Dennis Muilenburg said during an earnings call, citing stronger global trade and e-commerce. "That's part of what's factored into our decision to increase the 767 production rate from 2.5 to 3 per month in 2020."

Air freight demand last year grew at its fastest clip since 2010, according to the International Air Transport Association, an industry group.

Boeing has 99 firm orders for 767s, 61 of them freighters and 38 of them military tankers, a spokesman for the company said.

Boeing has recently seen an uptick in orders for other freight aircraft. In the summer of 2016, Boeing suggested it could end production of the original jumbo jet — the Boeing 747 — as airlines eschewed the plane in favor of more fuel-efficient models. But United Parcel Service in February helped extend the plane's life, doubling its order for the four-engine aircraft to 28. UPS also ordered up four new Boeing 767 freighters, and is converting three other passenger aircraft.

In 2016, Amazon, which unveiled its foray into air freight with a unit now called as Amazon Air, through 40 leased Boeing 767s. The company is building its own air freight hub in at Cincinnati/Northern Kentucky International Airport.

Muilenburg noted that Boeing has recently seen new demand for larger 777 freighters, under a letter of intent from Qatar Airways for five planes and an order for two more for Japan's All Nippon Airways, or ANA.

A sharp increase in air freight demand has been a boon to passenger airlines as well. This small segment of their business has been growing at double-digit rates as they fill their cargo holds with goods including salmon and blueberries.

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