For the second time this year, airplane manufactuer Boeing is cutting back production of its 747-8 airplane Bloomberg reported Friday.
"It's not a surprise, in fact it's smart," Howard Rubel, a New York-based aerospace analyst with Jefferies Inc, told Bloomberg in a phone interview. "It tightens up the market, doesn't put airplanes out there that can't be sold."
The company now expects to make 1.5 planes per month until 2015. This is a decrease of 14 percent from the 1.75 fixed ratio it originally predicted in April. The company has also seen a decrease in production since the start of 2013.
To increase production, boost sales, and re-establish itself in the cargo business, Boeing is also currently negotiating with many customers about a cargo airplane version of the 747-8.
Korean Air Lines has already concurred to purchasing five of the aircraft's passenger fleet, but has not finalized its order.
"Long-term the 747-8 platform remains a viable freighter given its favorable economics, but the introduction of the 777X will likely seal the fate of the 747-8 passenger version by the end of this decade," Peter Arment, a New York-based aerospace analyst with Sterne, Agee and Leach Inc., told clients Friday Bloomberg reported. Arment also feels the production cutbacks will not affect Boeing's earnings for 2014. He also envisions the company building one 747 aircraft a month.
According to Bloomberg, Boeing estimates the need for big airplanes like the 747-8, and A380 will climb to 760 planes at a value of $280 billion over the next 20 years.
"We have plans to keep that airplane in production for a long time," Randy Tinseth, a Boeing vice president for marketing told Bloomberg Oct. 7.
By the end of last month, Boeing had placed 107 orders for the 747-8 aircraft, and distributed 56 planes to clients.
In total, the company has received over 1,500 requests for the aircraft.
