BOEING TRUMPETS INTENT TO CUT COSTS.

Byline: Gregory J. Wilcox Daily News Staff Writer

Boeing Co. executives promised Monday an attack on costs to improve profitability and shareholder value at the aerospace giant in the face of daunting challenges and competition.

Philip M. Condit, the Seattle-based company's chairman and chief executive officer, pledged to shareholders at Boeing's annual meeting that the new management team knows what is broken at Boeing and has the experience to fix it. The company, he told an audience of about 500 at the Airport Westin Hotel, is ready for a rebound following several years of downbeat performance.

``This team has experience from the turnarounds at Ford and Unisys, the restoration of stability at Sunstrand and GM to the merger of the Burlington and Santa Fe (railroads),'' he said. ``These are leaders who are good at what they do, who anticipate and act, not react. With passion and speed, we are attacking costs.''

Condit's comments were long on cheerleading and short on specifics, especially at local company facilities like Rocketdyne's rocket engine plant in Canoga Park and the former McDonnell Douglas jet assembly and repair operation in Long Beach. He indicated that Long Beach's future may be focused on fixing what's already been built.

``We're just at the front edge of really understanding how big a role we can have in repair and overhaul,'' Condit said in response to a question about the sprawling former Douglas plant. ``This is an opportunity for the future. We've got to spend some time to understand just what the program is and how big we can grow the business.''

While Condit was painting a bright picture of the future, an indication of just what bruising competition Boeing faces from other industry players landed with a $4 billion thud as European consortium Airbus Industrie announced it would build the A318 after receiving orders for 109 planes. The A318 short-haul airliner will compete with the Boeing 737 and 717 models, the latter formerly known as the MD-95 and the only McDonnell passenger jet Boeing retained after buying that company.

Condit was unruffled when he addressed the issue in a news conference after the meeting. ``No single individual order makes or breaks a program,'' he said.

Condit noted that carriers like Delta, American and Continental will get all their planes from Boeing. ``That's one reason why I don't spend very much time worrying about orders. I look at deliveries,'' Condit said.

Airbus' plane is larger and more expensive than the 717. The A318 costs $35.8 million vs. $31.5 million for the 717.

Whether the 717 continues production may be decided by Deborah C. Hopkins, the company's new senior vice president and chief financial officer, who joined Boeing in December after holding a similar position at General Motors Europe.

She noted that three key measures indicate the company is now on the right course with margins, cash and the stock price all up in the first quarter. During the period, in which Boeing reported net income of $469 million, or 50 cents a share, operating margins jumped from less than 1 percent to 3.9 percent in the commercial division.

But that might be hard to sustain for the rest of the year, she said.

Boeing's new management has already identified which programs and product lines create superior value, marginal value or no value at all. Manufacturing operations - military, commercial and space - will be measured the same way, she said. The focus will be on reducing costs and streamlining operations.

``This is the way we're going to run Boeing. There is a new emphasis on performance throughout the entire company,'' she said.

During the annual meeting, which Boeing plans to rotate among its key operational centers, shareholders overwhelmingly rejected a proposal to adopt basic human rights criteria for the company's business operations in the People's Republic of China. Condit said there is vast potential in that market and favors China becoming a member of the World Trade Organization.