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Boeing to halve 747 production as cargo market shows little sign of recovery

BOEING says it plans to halve production rates of its 747-8 plane later this year, the latest step in the decline of the iconic jumbo jet and a fresh signal of persistent weakness in the global air freight market.

The aerospace giant said that it would shift in September to producing the jet at a rate of just six a year.

As a result of the change, it will recognise an after-tax charge of US$569 million against its fourth-quarter results.

Nicknamed the "queen of the skies," the 747 has been in continuous production since the mid-1960s in various models.

But the four-engine 747 has long since fallen out of favour among buyers of new jets for passenger travel, which prefer smaller, more fuel-efficient two-engine aircraft.

That has left Boeing heavily reliant on the air cargo market, which has struggled to escape a slump in recent years in part because of sluggish growth in international trade.

Global air freight yields, measuring dollars generated for a given carried weight, are currently at levels below those in 2009 during the global economic downturn, according to the International Air Transport Association (IATA).

Boeing said air freight contracted during November, with volumes declining by 1.2 per cent compared with the same period a year earlier. Global passenger air travel, by contrast, grew at 5.9 per cent during the same period.

"Global air passenger traffic growth and airplane demand remain strong, but the air cargo market recovery that began in late 2013 has stalled in recent months and slowed demand for the 747-8 freighter," said Ray Conner, head of Boeing's commercial airplanes division.