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Boeing Delays Plane Deliveries

The Boeing Co. said Monday that a rapid increase in jetliner production has forced it to delay delivery of a dozen planes to 10 airlines from this month to the fourth quarter of the year.

Boeing did not identify the customers involved. Ron Woodard, president of Boeing Commercial Airplane Group, said they had been notified and told “we are doing everything we can to get back on schedule.”

The delay will affect earnings in the third quarter, which ends Sept. 30, because Boeing does not count planes as sold until they are delivered. Wolfgang Demisch, aerospace analyst with BT Securities in New York, estimated the delays would cut Boeing’s third-quarter earnings by 10 cents to 15 cents per share, making them 40 to 45 cents per share.

Boeing’s stock fell $1.50 to $51.44 per share on the New York Stock Exchange Monday.

“Our plan includes working closely with suppliers to obtain needed parts, shifting personnel among our production lines, working overtime, talking with the unions to get industry-assist agreements, and exploring delivery-schedule changes with airlines in cases where they might prefer to reschedule a delivery for their own convenience,” Woodard said.

“We won’t have the revenues we expected in the third quarter, but we’ll be exactly where we were expected by the end of the year,” he said.

The dozen delayed planes include seven 737s, four 747s and one 757, Boeing said. Those planes would be worth about $1 billion.

The 747 jumbo jets are made in Everett, north of Seattle; 737s and 757s are made in Renton, southeast of Seattle.

The dozen planes are in addition to seven delayed aircraft earlier this year, company spokeswoman Susan Bradley said.

Boeing said it still expects to deliver 340 to 350 planes this year, as earlier forecast.

There are no plans currently to shift any production to Boeing’s newly acquired McDonnell Douglas facilities in California, Bradley said.

The problems leading to the production logjam range from parts shortages to lack of skilled workers, and change constantly, Bradley said.

“The factors that are a problem today are not the problematic factors of tomorrow,” she said.

Parts suppliers, many of whom also supply the auto and other industries, have been caught in the same squeeze as Boeing as airplane orders have increased, Bradley said.

“They face the same issues we do - getting skilled workers, getting materials. … For many of our suppliers it’s a capacity issue,” she said.

Some of Boeing’s own decisions “have aggravated the current situation,” Bradley said.

A recent early-retirement offer, for example, resulted in many highly skilled workers leaving the company, she noted. That resulted in a loss of “institutional memory” and a gap in training of new workers, she said.

Some retirees with specialized skills have been contracted to work during the crunch, she said.

Before the current boom began, Boeing also decided to re-engineer some production systems to make them more efficient, resulting in some old systems being dismantled before the new systems were mature enough to handle the current boom, she said.

Boeing was producing two 747 jumbo jets per month last year, doubled it to four per month earlier this year and plans to turn out five per month by next spring.

Overall, Boeing produced 18 jetliners per month last year, is currently rolling out 36 per month, and plans to produce 40 per month in the fourth quarter and a record 43 per month by the second quarter of next year.

Boeing recently shifted hundreds of workers from its 767 production line to the 747 to help get production back on track.

The company said recently it had no plans to hire outside temporary workers, but was considering other options such as bringing in skilled workers from other Boeing divisions in California and Kansas.

Consumer advocate Ralph Nader recently wrote to Boeing for assurance that the stepped-up pace of production has not hurt aircraft quality.

Bradley said the current problems have “no effect on quality.”

“Quality and safety are the No. 1 concerns in this company,” she said. “We would never compromise those for the sake of a schedule or profit.”

So far this year, Boeing has received orders for 240 jetliners, compared with 346 planes at this time last year and 712 in all of 1996.

Overall company employment as of Sept. 5 stood at 226,700, compared with 147,258 at the beginning of the year. The increase includes about 63,000 employees Boeing got in the McDonnell merger.