As the world's largest plane maker, Boeing (NYSE:BA) makes a lot of airplanes -- but not all airplanes are created equal.

From the smallish 737 to the jumbo-sized 747 and (perhaps confusingly) highest-numbered but only mid-sized 787, the profitability of Boeing stock depends in part on the number of planes it produces, but also on the profitability of each individual plane model produced. Management tells us that out of all the planes it builds, Boeing's 737 and 777 models are its real "profit drivers."

And that's why it's so distressing to hear: Boeing is cutting 777 production.

Images
Boeing's beloved 777. Prepare to see fewer of them flying overhead. Image source: Getty Images.

The news

Last week, Boeing made the somewhat surprising announcement that it is slashing the production rate of its uber-profitable 777 airliner by about 40%. Currently, the plane maker is churning out 777s at the rate of 8.3 planes per month (PPM). It had already planned to cut that rate to seven planes  per month in January. Now, management says that with the deceleration in plane orders -- Boeing's sold only 17 so far this year -- it's going to ramp down 777 production even more, to just five planes per month starting in August.

So where does this leave Boeing with regard to its legendarily long backlog of planes awaiting construction? Based on the most current data, the production schedule looks roughly like so:

Boeing Plane

Order Backlog 

Current Production, 
in PPM

Changing to..

Changing again to...

Backlog in Months (Approx.)

737

4,280

42

47 ppm in 2017

52 ppm in 2018 and 57 in 2019

79.3

747

29

0.5

--

--

58.0

767

94

2.0 

2.5 ppm in late 2017* 

--

40-ish*

777

456

8.3 

7 ppm in January 2017**

5 ppm in August 2017**

88.4

787

721

12 

14 in 2020

--

56.6

*Dear Boeing: Please define "late."

Where we are now

Since we last checked in on Boeing's production rate and backlog numbers at the beginning of this year, we see that the company has beefed up its backlog of 747s and 767s, while whittling away at its backlogs of all other models. Such is the effect of continued high production rates, matched against a dearth of new orders -- just 470 net new orders across all models, booked this year.

In terms of backlog, Boeing has:

  • Slashed about four months off its 737 backlog.
  • Added perhaps four months to the 767 backlog.
  • Added nearly nine months to the 777 production backlog.
  • Added more two years to the 747 production line's lifespan.
  • Left the calendar length of the 787 backlog basically unchanged.

Thus, the net effect we're seeing here is Boeing attempting to calibrate its production rates to preserve backlog of slower-moving planes, while attempting to get faster sellers to their customers even faster, decreasing wait times.

It's also worth keeping in mind that, even as Boeing plans 777 production cuts for the coming year, it has also floated plans to rapidly accelerate 777 production once its 777X production line is well up and running. Once the 777Xes begin appearing, Boeing has plans to churn them out as fast as 10.4 planes per month.

What it means for investors

And really, that's the good-news subtext to worries about Boeing's imminent 777 production cuts -- they may cut deep, but they won't last forever. Ultimately, Boeing is in the plane-building business, and not the plane-not-building business. As soon as market demand justifies it, we'll see that 777X production line spin right up.

And with any luck, that will pull Boeing's profits right up with it.

Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. You can find him on Motley Fool CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 346 out of more than 75,000 rated members.

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