Boeing to cut up to 7,000 jobs in St. Louis

Orders are dwindling for F-15 fighter-bomber

May 14, 1999|By BLOOMBERG NEWS

SEATTLE -- Boeing Co., the world's biggest aircraft maker, said yesterday that it will cut as many as 7,000 jobs in St. Louis -- about 35 percent of the work force there -- as a result of dwindling orders for its F-15 fighter-bomber.

Boeing also said for the first time that it will have to stop production of the Cold War-era fighter early next year, after it finishes delivering the F-15 to its customers, Israel, Saudi Arabia and the U.S. Air Force.

The cuts follow Greece's decision last month to pass over the pricier F-15 -- widely viewed as the world's most advanced air-to-air fighter -- for Lockheed Martin Corp. F-16s to fill an order for 50 jets.

Boeing was dealt another blow yesterday, when a top Israeli Defense Ministry official said Israel's air force recommended in a closed-door meeting that the government award Lockheed Martin a $2.5 billion fighter plane tender.

"Once we completed an assessment of our business environment based on the April 30 decision by the government of Greece, we decided to let our team and the community know as soon as possible what to expect for the foreseeable future," Jerry Daniels, Boeing's St. Louis site director, said in a statement.

Only another F-15 order from Israel this year will save the jet's 30-year production run at Boeing. Losing the F-15 would be another financial blow to Boeing, which is struggling with declining commercial-jet orders.

"It's a plane that first went into service in the early 1970s," said Peter Jacobs, an analyst with Ragen MacKenzie Group Inc. in Seattle. "There's just not going to be enough work there next year to support it."

Seattle-based Boeing is cutting 48,000 jobs, about 20 percent of its work force worldwide, to cope with a slump in the commercial-jet market because of the economic crisis in Asia. The company did not say in its statement whether the latest cuts are in addition to those.

Analysts have said the F-15 brings in yearly profit of about $100 million on revenue of $1 billion, making it the third-biggest money-earner in the company's military-aircraft division.

Jacobs said the loss of the F-15 could clip 10 cents a share from Boeing's earnings next year, projected at $1.83 in a First Call Corp. survey of analysts.

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