Contracts Mean New Life for Boeing in Long Beach.

A recent surge in sales of aircraft manufactured at Boeing Co.'s Long Beach plant has allayed fears that the company might soon shutter the plant and layoff the 13,000 people who work there.

Deals between Boeing and TWA and, earlier this month, Midwest Express for the 717 commercial jet, along with the U.S. Air Force's expressed desire to buy 60 more C-17 cargo planes, virtually guarantee that the Long Beach operations will remain in business through the decade.

"It looks like the program is on a lot firmer ground then it used to be," said Paul Nisbet, an aerospace analyst for JSA Research Inc. "There are some analysts that felt the 717 (program) should have been shut down. They felt it was not modern enough and was similar in size to (Boeing's) 737 and, therefore, was viewed as a competitor within Boeing. But they've been proven wrong."

American Airlines-owned TWA, which committed to buying 15 of the 100-seat passenger jets, is Boeing's third customer among the major airlines. And with each 717 selling for $35 million to $39.5 million, Boeing is basking in the fiscal glow of sales and options for 55 717s since the beginning of the year.

After failing to secure a single major 717 contract since AirTran Airways in 1995 ordered 50 planes with an option for 50 more, Boeing early this month convinced Midwest Express to buy 20 of the planes, with an option for 30 more.

In addition, AirTran just exercised the first two of its options by placing firm orders for planes. The Orlando, Fla.-based company has repeatedly stated that it intends to ultimately place orders for the entire 100 planes, which use a Rolls Royce engine to reduce fuel costs and create less pollution and noise than the McDonnell Douglas DC-9 it was created to replace.

Not including the Midwest deal, which is a pile of paperwork away from being finalized, Boeing has firm orders for 156 of the planes and options on 145 more, company officials said.

Military deals pending

On the defense side, the company hopes that Secretary of Defense Donald Rumsfeld will sign off on an order for 60 additional Air Force cargo planes, which can land on short or undeveloped runways and from which cargo and personnel can he unloaded rapidly. That order is seen as a definite possibility as part of the Bush administration's overall plan to spend more money on weapons and other military hardware. The planes sell for approximately $225 million each.

"We've always said we want more C-17s," said Gloria Cales, an Air Force spokeswoman. "We need them to fulfill our airlift requirements."

Boeing sold four C-17s to the British Royal Air Force last year -- a fact that Long Beach City Manager Henry Taboada predicted would attract other foreign customers in the future.

"Typically, when you sell to one NATO nation, others follow," he said. "Everybody wants to have the best. No air force wants to be second class."

Concern about the 717 program arose amid speculation about two years ago that American Airlines would not include the planes on the list of TWA assets it had agreed to purchase during the latter's bankruptcy proceedings.

After committing to buy 15 of the 717s, TWA mystified industry analysts by committing a few months later to buy 50 A318 commercial jets, which are made by Boeing's archrival Airbus Industrie. In an industry where fleet orders are typically placed with one manufacturer, to minimize the amount of required pilot training and spare parts purchasing, TWA's split order seemed odd.

When TWA filed for bankruptcy, the split order became a subject of concern for Boeing, as some speculated that American Airlines would follow through with TWA's commitment to buy the A3l8s but not fthe 717s.

But the exact opposite happened. As word spread about the 717's efficiency and reliability, American earlier this year withdrew its commitment to Airbus and signed on with Boeing.

Meeting projections

Boeing accountants have stated that the Long Beach operation needed to sell 200 planes over an unspecified amount of time to break even. But John Thom, a Boeing spokesman, said with deals in place for nearly 300 planes, the expectation now is to sell far more, adding that the market could command 2,000 to 3,000 of the planes over the next 20 years.

"We've been characterized as slow-selling and about to go out of business," said Thom. "But the sales profile -- a lot at the beginning and then a slow period during development -- is very similar to other airplane programs of Boeing and McDonnell Douglas over the last 20 years."

The revenues are sorely needed to justify Boeing maintaining a full jet manufacturing operation in Los Angeles County, where high business taxes on top of expensive land, labor, construction and utilities resulted in the mass exodus of defense companies during the 1990s.

With Boeing's stunning announcement last month that it would relocate its headquarters from Seattle to either Chicago, Denver or the Dallas-Fort Worth area, Long Beach officials feared the worse.

"The recent contracts and orders give us an indication of renewed strength for the company. It means continued employment for many of our residents." Taboada said.