Boeing Co. (BA) – Get Report shares leapt to the top of the Dow Thursday after it said it would shift all of its 787 Dreamliner activity to South Carolina as it continues to consolidate its fleet production in the wake of demand changes brought by the coronavirus pandemic.
The stock pared some of those gains, however, after Washington Governor Jay Inslee said the move from suburban Seattle, where the current 787 production is based, could trigger a review of the planemaker’s “favorable tax treatment”.
Boeing said the move will be completed next year, starting with a previously-announced rate of six aircraft a year, although some production will continue at its Everett facility until the North Charleston, South Carolina move is complete.
“The Boeing 787 is the tremendous success it is today thanks to our great teammates in Everett. They helped give birth to an airplane that changed how airlines and passengers want to fly. As our customers manage through the unprecedented global pandemic, to ensure the long-term success of the 787 program, we are consolidating 787 production in South Carolina,” said Boeing commercial CEO Stan Deal.
“Our team in Puget Sound will continue to focus on efficiently building our 737, 747, 767 and 777 airplane families, and both sites will drive Boeing initiatives to further enhance safety, quality, and operational excellence,” he added.
Boeing shares were marked 0.5% higher in early afternoon trade, among the top gainers on the Dow Jones Industrial Average, and changing hands at $166.12 each.
Boeing said earlier this year that it will delay the ramp-up of production on the 737 MAX, which has been grounded by regulators around the world, including the FAA, following fatal crashes in 2018 and 2019, and announced the end production of its iconic 747 jumbo jet in 2022.
Production cuts are also slated for the 787 and 777 jet programs after CEO David Calhoun hinted at further job cuts, following an earlier plan to reduce its workforce by around 4,000, in a letter to employees after a wider-than-expected second quarter loss of $4.79 per share last summer.