BREAKING: Boeing delays 747-8 first flight to early 2010, EIS now 4Q10 (Update1)

Boeing to Recognize Third-Quarter Charge for the 747 Program
CHICAGO, Oct. 6 /PRNewswire-FirstCall/ -- The Boeing Company (NYSE:\nBA) today said it expects a pre-tax charge against third-quarter\nresults of approximately \$1.0 billion due to increased production costs\nand the difficult market conditions affecting its 747-8 program.

Approximately \$640 million of the charge reflects\nhigher estimated costs to produce 747-8 airplanes at both Boeing and\nsupplier facilities. As the program assembled major components of\ninitial 747-8 Freighters during the third quarter, it became clear that\nlate maturity of engineering designs has caused greater than expected\nre-work and disruption in manufacturing. This is resulting in\nadditional resources being applied on the program and higher supplier\nexpenses, which are the primary cost drivers.

The remaining \$360 million of the charge relates to challenging\nmarket conditions and the company's decision to maintain the 747-8\nproduction rate at 1.5 airplanes per month nearly two years longer than\npreviously planned, deferring an increase to 2 per month. Higher\nallocation of fixed expenses and volume-based penalties to suppliers\nare the main drivers of the additional costs.

Because the 747 program is in a loss position, costs\nassociated with the factors above will be immediately recorded in the\nthird quarter for future 747-8 deliveries.

The company now expects first flight of the 747-8\nFreighter to occur by early next year with the flight test program\ntaking place in 2010. First delivery of the 747-8 Freighter is now\nexpected in the fourth quarter of 2010. First delivery of the\nIntercontinental passenger variant remains scheduled for the fourth\nquarter of 2011.