BOEING WILL take a $1 billion (€680 million) charge in the third quarter on its 747-8 programme – the updated and stretched version of its 747 jumbo – making it the second high-profile new aircraft project to hurt the US group’s profitability in recent months.
Yesterday’s announcement was another setback for the world’s second-largest aircraft-maker after problems on its 787 Dreamliner programme.
The company blamed the 747-8 writedown on rising production costs because of design changes, and the need to maintain lower production rates because of poor market conditions.
Boeing also said that it would delay the first flight of the freighter version of the 747-8 to 2010 from the fourth quarter of 2009.
Boeing launched the 747-8 in 2005 as a rival to Airbus’s A380 super jumbo, the world’s largest passenger aircraft.
Boeing said at the time that the passenger version of the jet would hit a “sweet spot” for airline customers, predicting that it would win more than half of all orders for 400 seat-plus commercial aircraft over the next 20 years.
But it has struggled to gain traction for the new aircraft with just two airline customers ordering a total of 27 passenger versions of the aircraft.
The freighter version has performed somewhat better with 78 orders.
Yesterday’s announcement of keeping production rates down to 1.5 aircraft per month for nearly two years longer than previously planned reflected a significant number of deferrals.
Based on its current 747-8 order backlog, the $1 billion charge will push the programme into a loss.
It comes as the company had been hoping to close a troubled chapter in its commercial aircraft division.
After multiple delays to its 787 Dreamliner, the aircraft-maker last month replaced Scott Carson, who had run its commercial unit since 2006, with James Albaugh, formerly the head of its defence arm.
“The whole 747-8 programme is a big question mark,” said Brian Nelson at Morningstar in Chicago. “Should Boeing really be wasting resources on the 747 given the demand or should they reallocate them to the 787? In any case, Boeing’s third-quarter results are going to be very, very messy.”
In August, Boeing said that it would take a $2.5 billion charge in the third quarter on its troubled 787 programme. The all-new, wide-bodied fuel-efficient jet has suffered from multiple delays.
Boeing shares were slightly lower at $52.21 in early afternoon trading in New York. – (Copyright The Financial Times Limited 2009)
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