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MD's Fate Still in Market's Hands : Boeing Chief's View on Troubled Douglas Line Is Unchanged

March 19, 1997|JAMES F. PELTZ | TIMES STAFF WRITER

Boeing Co. still wants the airline market to decide whether McDonnell Douglas Corp.'s struggling family of MD jetliners will continue to be built after Boeing buys McDonnell Douglas this summer, Boeing's chairman said Tuesday.

The outcome will affect about 10,000 people who build the planes at McDonnell's Douglas Aircraft Co. plant in Long Beach, and thousands of other Southern Californians who work at firms that provide parts to Douglas.

When the aerospace giants announced their stunning, $13.3-billion merger in December, Boeing Chairman Philip M. Condit said he expected the world's airlines to decide the fate of the MD line. With initial planning now underway on melding the companies, Condit said he hasn't changed his opinion.

"The market is going to make that determination," he said in a briefing with reporters during a visit to Los Angeles. "If we can sell the MD line, with reasonable [profit] margins, we will continue to build them."

But Condit declined to speculate about the future of the Long Beach plant if that scenario doesn't occur. Some analysts have said they don't expect sales of the Douglas models to pick up, and they see Seattle-based Boeing eventually folding the program.

Condit said any such decision won't be made until Boeing has had a chance to fully evaluate the Long Beach assets to see if it can help bolster sales of the MD jets. That won't happen until the merger is completed in July or August, he said.

*

Douglas' problems are a big reason why St. Louis-based McDonnell--which is also one of the nation's biggest defense contractors--agreed to be bought.

Orders for its MD-80 and MD-90 single-aisle jets and its MD-11 wide-body have been weak for years, with Boeing and its only other major rival, Europe's Airbus Industrie, getting the lion's share of sales.

Douglas also is developing the MD-95, a smaller, 100-seat jetliner. But so far that plane has only one buyer, ValuJet Airlines, raising fears that the project might be scrapped.

Condit declined to say whether Boeing will keep the MD-95, but he did say that "there is clearly a lot of market interest in smaller jet aircraft."

Meanwhile, Condit said he expects job losses related to the merger to be "very minimal" because the companies don't overlap in many areas.

He added that "there's a lot of room to gain efficiencies and even hire" people after the deal closes. Boeing will have about 200,000 workers after it buys McDonnell.

Condit also discounted antitrust concerns that the merger will leave only two major jetliner builders in the world: Boeing and Airbus.

"There are an awful lot of people who would love to get into this business, particularly in Asia," Condit said. "The minute you get lazy, or take the market for granted, you're opening the door for another competitor."

Open Collar

Before his briefing, Condit couldn't help taking note of his picture in Boeing's just-published 1996 annual report. Why? For the first time in Boeing's history, its chairman is photographed not wearing a coat or tie.

Condit is known for his unpretentious manner and for favoring casual dress even at work, where he's frequently seen in shirt sleeves and khakis.

At Tuesday's briefing he shed his coat before it started. And his comment on the annual report? "The times they are a-changing."

Times staff writer James F. Peltz can be reached at james.peltz@latimes.com

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