The Wall Street Journal-20080117-Boeing Blames Latest Delay In 787 Jet on Supplier Issues
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Boeing Blames Latest Delay In 787 Jet on Supplier Issues
Grappling with another delay with the new 787 commercial jet, Boeing Co. executives conceded they had underestimated the amount of time needed to finish work done by suppliers of key components.
Boeing has suffered two previous delays in getting to market the 787, a best-seller called the Dreamliner that is expected to be more efficient to fuel and fly. The latest delay, reported Tuesday by The Wall Street Journal, sent its shares down 4.7%. Yesterday, its shares regained some ground, climbing $2.01, or 2.6%, to $79.87 in 4 p.m. New York Stock Exchange composite trading.
In publicly acknowledging the new problem yesterday, Boeing said the 787's first flight won't take place until the end of the second quarter, a three-month delay from the company's most recent estimate. Boeing won't make its first deliveries of the 787 until 2009, later than the company's most recent forecast of deliveries in late 2008.
The delay demonstrates the challenges Boeing and rival Airbus face in meeting airlines' demands for efficient next-generation jetliners, even as they race to fill unprecedented demand for their current models. Airbus, a unit of European Aeronautic Defence & Space Co., said yesterday that last year marked a third big year for orders for new jetliners, though it trailed Boeing's similarly strong orders. Both companies now face the logistical challenges of filling orders for planes being developed, and quickly churning them out in large numbers.
Boeing's delay will further pressure the Chicago-based company to keep to the new schedule as a means of maintaining trust and credibility with both customers and Wall Street. Airbus suffered such problems as it wrestled with expensive and embarrassing delays on its mammoth A380 in the past three years.
Pat Shanahan, the executive in charge of the 787 program, said Boeing's latest assessment is more accurate than past guidance, because the October outlook was "based more on analysis," and this projection reflects more experience and a better understanding of the work involved.
The Boeing delays have stemmed in part from the company's move to hand over control of important elements of the 787's development to suppliers, some of whom then fell behind in their work. Scott Carson, head of Boeing's commercial-airplanes division, said the company has been trying to finish some of the delayed supplier work itself at Boeing plants, but hasn't completed "jobs at the rate required to keep our previous schedule."
Boeing executives said it was too early for a definitive financial assessment of the delay. An update is expected when the company details its fourth-quarter results Jan. 30.
Airbus tallied up its commercial-jet deliveries and orders for 2007 with a record 1,341 net orders -- trailing Boeing's 1,413.
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David Pearson contributed to this article.
