Delay will cost Boeing $1 billion
Company blames slow sales, design changes for 747-8’s delay
Boeing Co. said Tuesday it will record a $1 billion charge because of a delay in producing a new version of the 747 freighter jet, blaming slow sales and late design changes.
It’s the second time in four months that the company has announced delays in delivering a new aircraft model. In June, it announced a further postponement of the 787, a highly anticipated passenger plane which is more than two years behind schedule.
The troubles come as the airplane maker grapples with dwindling orders amid the global economic downturn, which has undercut demand for air travel and cargo services. Some airlines have been forced to cancel or delay plans to buy new planes. Boeing has cut costs and announced plans to slash thousands of jobs and scale back production of some aircraft.
Boeing’s latest hit will result in combined third-quarter charges of $3.5 billion from the 747 and 787 programs.
The charge from the 747-8 – a larger plane than earlier versions – includes $640 million for higher estimated production costs for the Chicago-based company and its suppliers. Late engineering designs meant the plane had to be reworked and manufacturing was disrupted.
The charge also includes $360 million stemming from Boeing’s decision to hold production at 1.5 airplanes per month rather than boost it to two, a result of slow orders.