SEATTLE Boeing suffers setbacks in 2002

Boeing ponders uncertain future after limping through 2002.
SEATTLE (AP) -- The year can't end soon enough for Boeing.
The aerospace manufacturer limped through 2002 as it dealt with a series of setbacks, particularly in its core commercial jet business. Boeing cut 30,000 jobs, announced more reductions for 2003, slashed production in half, lost the year's biggest plane order and was forced to watch as the airline industry underwent a massive shakeout.
Industry analysts saw a bigger problem -- Boeing's failure to champion a vision for the future. The company's decision to shelve ambitious plans to build a Sonic Cruiser jet, which would travel near the speed of sound, made them question whether Boeing has lost its nerve.
"You could either regard 2002 as [Boeing's] taking a break or as a pattern for the future," said Richard Aboulafia, aviation director with Teal Group of Fairfax, Va. "It's the latter that is a bit disturbing."
To be sure, it was a difficult year for the commercial aviation sector.
Customers hurt
The airlines that are Boeing's customers were hurt by the sluggish economy, a drop in business travel and the aftereffects of the Sept. 11 attacks. The biggest names in U.S. aviation -- including United Airlines, which filed for bankruptcy -- laid off tens of thousands of workers and cut routes as they reported billions of dollars of losses.
Boeing was forced to reschedule deliveries of more than 500 jets -- easily a year's work -- since the attacks and halved its production rates, laying off thousands. The cuts will continue in 2003, the company said, with about 5,000 achieved through attrition and layoffs.
Boeing also lost a huge order to its chief competitor, Airbus of Toulouse, France. British low-fare carrier easyJet announced in October it would order 120 jets from Airbus -- despite an existing fleet of Boeing 737s -- and take options on another 120.
Instead of building the Sonic Cruiser, Boeing said it plans to launch in 2004 a more traditional, middle-of-the-market, super-efficient jet the size of a 767.
Different tack
Analysts noted that in the past, Boeing has forged ahead with new jet development even when the economic climate was shaky and the outlook for orders poor.
Teal Group's Aboulafia said Boeing, from a commercial jet production standpoint, did little this year but retreat and protect its profits.
"It's part of the new Boeing," Aboulafia said. "It's about generating value for shareholders and return on investment and not market leadership."
Including all its businesses, the company earned a profit of $1.73 billion, or $2.14 a share, for the first nine months of the year, on revenue of $40.4 billion.