This is a breaking story and will be updated.Boeing to Recognize Third-Quarter Charge for the 747 Program
CHICAGO, Oct. 6 /PRNewswire-FirstCall/ -- The Boeing Company (NYSE: BA) today said it expects a pre-tax charge against third-quarter results of approximately $1.0 billion due to increased production costs and the difficult market conditions affecting its 747-8 program.Approximately $640 million of the charge reflects higher estimated costs to produce 747-8 airplanes at both Boeing and supplier facilities. As the program assembled major components of initial 747-8 Freighters during the third quarter, it became clear that late maturity of engineering designs has caused greater than expected re-work and disruption in manufacturing. This is resulting in additional resources being applied on the program and higher supplier expenses, which are the primary cost drivers.
The remaining $360 million of the charge relates to challenging market conditions and the company's decision to maintain the 747-8 production rate at 1.5 airplanes per month nearly two years longer than previously planned, deferring an increase to 2 per month. Higher allocation of fixed expenses and volume-based penalties to suppliers are the main drivers of the additional costs.
Because the 747 program is in a loss position, costs associated with the factors above will be immediately recorded in the third quarter for future 747-8 deliveries.
The company now expects first flight of the 747-8 Freighter to occur by early next year with the flight test program taking place in 2010. First delivery of the 747-8 Freighter is now expected in the fourth quarter of 2010. First delivery of the Intercontinental passenger variant remains scheduled for the fourth quarter of 2011.
BREAKING: Boeing delays 747-8 first flight to early 2010, EIS now 4Q10 (Update1)
This newly announced delay, FlightBlogger has learned, comes as part of a comprehensive status review of Boeing's commercial programs conducted by newly installed commercial airplanes chief, Jim Albaugh. In addition, program sources indicate the level of completion of tasks on the 747-8F required ahead of first flight stand at just 50%.
0 TrackBacks
Listed below are links to blogs that reference this entry: BREAKING: Boeing delays 747-8 first flight to early 2010, EIS now 4Q10 (Update1).
TrackBack URL for this entry: http://www.flightglobal.com/cgi-bin/mt/mt-tb.cgi/66004
24 Comments
Leave a comment
Want a user picture? Get a Gravatar!
ADVERTISEMENT






on October 6, 2009 9:48 AM | Reply
Wasn't it not too long ago that Boeing said that the 787 and 747-8 could have their 1st flights the same day?
on October 6, 2009 10:22 AM | Reply
Whatever they payed Joe Sutter, it wasn't enough.
on October 6, 2009 10:23 AM | Reply
Is there any chance to see better operating results in 3Q09 compared to 3Q08 considering the huge production disruption due to strike last year?
on October 6, 2009 10:49 AM | Reply
Welcome aboard Jim, but I question the 2010 entry into service if first flight is not until the first of the year. There is this little thing called cold weather testing, that so far, has never been done when it is summer in the northern hemisphere. I suspect this won't be completed until winter 2010-2011, not winter 2009-2010. Maybe there is a plan for this that escapes me. JMHO
on October 6, 2009 11:27 AM | Reply
On October 2, Mo Yahyani, VP and general Manager of Boeing's 747 project indicated that the plane was 90% completed and first flight was scheduled for this quarter.
Four days later, a postponement is announced, once again raising questions about Corporate communication and credibility issues about
projections. We are forced to relive te 787 experience again and it lowers the confidence level for achieving goals on time.
This is a disappointment which seems to be a more common occurance than a surprise success.
on October 6, 2009 11:43 AM | Reply
Does Boeing have any credibility left when it comes to their announced schedules?
on October 6, 2009 1:26 PM | Reply
At least they seem to have solved the simultaneous flight test issue, unless the 787 is delayed again...
Is there an official roll-out "scheduled" for the 747-8?
on October 6, 2009 1:35 PM | Reply
Why it goes from 90% complete to 50% complete in a few days?
Boeing did nothing to substantiate a schedule or a reschedule. It seems schedules are announced at will with no accountability. They need to detail the reasons of previous schedule mistakes and show people why they believe the new schedule is trustworthy.
on October 6, 2009 2:09 PM | Reply
At least the annual earnings pissaway is early this year.
on October 6, 2009 3:02 PM | Reply
Yet another disappointmet on the BCA side.
Interesting to note that in a side comment (#4) of the link beloww, its alleged that Jon's 50% figure may be slightly wrong;
http://www.fleetbuzzeditorial.com/2009/10/06/747-charge
on October 6, 2009 5:58 PM | Reply
:( x 975,000 lbs
on October 6, 2009 6:26 PM | Reply
Will someone please pick up the phone in the front office and call those on the floor putting this project together and ask them where they are in the progression before announcing the next big embarrisment. Now , I feel better, that wasn't so hard! Wait I forget we are fighting the Too Big To Succeed Syndrome (TBTSS) or it is this near the end of the book "A Bridge to Far" ? I hope they get these aircrafts launched before the market place gets the whatevers to set in.
on October 6, 2009 7:29 PM | Reply
The 50% completion figure is indeed highly dubious.
on October 6, 2009 7:29 PM | Reply
The 50% completion figure is indeed highly dubious.
on October 7, 2009 1:55 AM | Reply
"As the program assembled major components of initial 747-8 Freighters during the third quarter, it became clear that late maturity of engineering designs has caused greater than expected re-work and disruption in manufacturing."
Isn't "late maturity of engineering designs" code for our subcontractors have provided us with components that don't fit?
on October 7, 2009 1:56 AM | Reply
"As the program assembled major components of initial 747-8 Freighters during the third quarter, it became clear that late maturity of engineering designs has caused greater than expected re-work and disruption in manufacturing."
Isn't "late maturity of engineering designs" code for our subcontractors have provided us with components that don't fit?
on October 7, 2009 4:56 AM | Reply
there is a terrible echo in here...in here...in here...
on October 7, 2009 6:46 AM | Reply
More support personnel working 2nd shift would help tremendously...also, not sub-contracting out the engineering responsibility would be fabulous. Many of the parts I am tasked with assembling have contracted a nasty form of V.D. or, Vendor Disease.
All I want are the phone numbers of the mechanics at Spirit who work on parts that I have to make something out of so I can tell them where to stop drilling holes. The official channels of communication have been thus far useless.
on October 7, 2009 10:14 AM | Reply
No.
on October 7, 2009 12:59 PM | Reply
After all the shouting and questions, I think it evident that Boeing's decision to postpone was not a technical one but simply because there are not enough customers out there for this plane so it serves Boeing to slow down the production of this model until a recovery is in place.
This will simply staunch the bleeding for a while.
Also, additional manpower can be shifted to the 787 Program.
on October 7, 2009 1:02 PM | Reply
I just keep loading up on the stock... For the long term investor, these delays are a gift....
on October 7, 2009 3:08 PM | Reply
I think the 50% number is all the work that needs to be done before the first flight, like gauntlet testing and taxi-testing. The first airframe is supposedly 90% built, but that doesn't include testing that needs to be done.
on October 9, 2009 10:07 AM | Reply
WOW, All the delays from bad engineering for 747-8 and 787..What is it going to do for the tanker competion coming around the corner, hell just give it away...
on October 14, 2009 7:16 AM | Reply
Where does the Deming/PDSA model fit in the current McDonnell-Douglas/Boeing processes?
Apparently, nowhere....