Tulsa World: Two jets' production woes hurt Boeing bottom line

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Two jets' production woes hurt Boeing bottom line
The 787 and 747-8 models contribute to a third-quarter loss of $1.6 billion.

A visitor to the Asian Aerospace International Expo in Hong Kong on Sept. 9 looks at a model of a Boeing 747-8. Earlier this month, Boeing Co. announced a production delay for the freighter jet, citing slow sales and late design changes. Kin Cheung / Associated Press

By DANIEL LOVERING Associated Press
Published: 10/22/2009 2:29 AM
Last Modified: 10/22/2009 5:38 AM

Boeing Co. said Wednesday it lost $1.6 billion in the third quarter, hurt by growing costs from two troubled plane programs that forced the airplane maker to slash its profit forecast.

The company has struggled to launch its new 787 passenger plane and a revamped version of its classic 747 jumbo jet. Production delays, parts shortages and last-minute fixes have cost the company billions in write-downs along with additional design and manufacturing expenses.

While sales edged up 9 percent during the quarter, profits took a big hit because Boeing booked charges of more than $3.6 billion for its two plane programs.

They "clearly overshadowed what continues to be otherwise solid performance across our commercial production programs and defense business," CEO Jim McNerney said in a statement.

The jet problems also led the Chicago-based company to cut its 2009 profit forecast to $1.35 to $1.55 per share from $4.70 to $5 per share.

Boeing's quarterly loss amounted to $2.23 per share, compared with earnings of $695 million, or 96 cents per share, a year earlier.

Quarterly revenue rose to $16.69 billion from $15.29 billion a year earlier.

Sales from Boeing's defense business, which makes fighter jets, satellites and security systems, rose 3 percent. The business accounts for about half the company's overall revenue. Commercial aircraft revenue rose 13 percent.

Earlier this month, Boeing said production was delayed for a new version of its 747 freighter jet, blaming slow sales and late design changes.

Problems with the 747-8 program are hardly new. Last year, Boeing said it was postponing deliveries because of design changes and a strike that shut down commercial jet factories for eight weeks.

The 787 has also struggled. In June, Boeing said parts of its aircraft needed to be reinforced. The highly anticipated passenger plane is more than two years behind schedule. The midsize jet is built with lightweight carbon composite parts to improve fuel efficiency.

The 787 is supposed to be ready for its inaugural test flight by year's end, with first deliveries in the last three months of 2010.

In a conference call, McNerney said the company expects to announce the location of a second assembly line for the 787 in "the next couple of weeks," having narrowed the choices to Charleston, S.C., where Boeing is buying a plant that makes large sections of the plane, and Everett, Wash., where its commercial aircraft business is based.

Components of the 787 are being manufactured in Tulsa by Spirit AeroSystems Inc. Work by Spirit has not contributed to the plane's production problems, officials of the Wichita-based company say.

The latest charges come as Boeing grapples with dwindling orders amid the global economic downturn, which has undercut demand for air travel and cargo services.

Boeing said its order book shrank 2 percent during the quarter, to $320 billion, due to dwindling demand across its commercial airplane and defense businesses. By DANIEL LOVERING Associated Press

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If you see a comment that violates our terms and conditions, please help us by clicking the "Report this Comment" link next to a comment. That will alert the web staff to review the comment. Thank you. -- Web Editor Jason Collington

	Report Comment FS, Broken Arrow (10/23/2009 11:08:46 AM) Isn't outsourcing grand?
	Report Comment Gramps, (10/25/2009 8:56:13 PM) Don't think I'll be flying on that one. At what point will the weight of the reinforcements equal the old way of making a plane?

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