Boeing delays 787 jetliner flight

Start-up issues, supply chain blamed

January 17, 2008|By Peter Pae | Peter Pae,LOS ANGELES TIMES

Boeing Co., noting unresolved production problems, said yesterday that it will not be able to deliver its first 787 Dreamliner passenger jet until early 2009 - more than nine months later than it had promised airlines.

The latest holdup marked another embarrassing setback for Boeing, which had insisted as recently as last month that there would be no further delays after pushing back the plane's delivery by six months in October.

In a conference call with analysts yesterday, Boeing officials said they didn't expect the delay to have a "significant" effect on 2008 earnings, though they were still assessing how it would affect earnings in 2009, the first year the company would have to pay penalty fees to airlines.

But Peter Arment, an analyst with American Technology Research, estimated in a report to investors yesterday that Boeing might have to pay penalties to 40 airlines totaling more than $1 billion.

The Chicago-based aircraft maker has orders for 817 planes valued at more than $110 billion from 53 airlines.

Arment also cautioned that the program could face "further complications" that could require Boeing to pay major suppliers at least $1 billion to renegotiate a revised production schedule.

"Boeing is a great company and eventually will make another great airliner for the world to enjoy," Arment said. But over the next several quarters, he said, Boeing stock "is likely dead money."

Airlines have been eager to get the new mid-size, long-haul plane, which Boeing has promised would be highly fuel-efficient and provide more passenger comfort. It is the company's hottest-selling plane ever.

But Boeing said it has not been able to resolve problems with major components made by its key suppliers. Parts for the planes are made by manufacturers scattered around the globe and then shipped to Boeing's Everett, Wash., plant where they are in many ways "snapped" together.

"We underestimated how long it would take to complete someone else's work," Pat Shanahan, general manager for the 787 program, said during a teleconference call with analysts yesterday.

Boeing shares rose $2.01, or 2.6 percent, to $79.87 in yesterday's trading, after losing about 5 percent the previous day on news that another delay was imminent.

"While we're deeply disappointed that we could not maintain our previous schedule, we believe we've made the right decision to help assure the success of this program," Scott Carson, head of Boeing's commercial aircraft business, said.

Japan's All Nippon Airways, which was expecting to be the first airline to fly the plane this spring, said in a statement that the latest delay was "extremely regrettable," but it added that it would "work with Boeing on the revised schedule and decide how to proceed from there."

Peter Pae writes for the Los Angeles Times.

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