Boeing Co. extended a yearlong delivery delay for its newest 747 jet by six months as engineers redesign some parts and said it will add a fifth plane to the test fleet to speed up the work.
The postponement to mid-2011 shouldn’t have a material impact on Boeing’s 2010 earnings, the Chicago-based company said in a statement today. Boeing has taken $2.04 billion in charges amid three prior delays that had pushed back the latest delivery date of the freighter version -- due before the passenger model -- to the end of this year.
The fifth variant of the 40-year-old jumbo jet stretches the iconic hump on top and features new engines and the longest wing Boeing has ever built. The new design forced engineers to make more changes than the company expected. While analysts surveyed by Bloomberg had predicted additional charges, higher profit from existing jets helped Boeing make up for added expenses for the 747, Gleacher & Co.’s Peter Arment said.
“It’s a plane they’re very familiar with on the manufacturing front, so they’re very comfortable with their costs despite the delay,” said Arment, an analyst based in Greenwich, Connecticut. “We’re seeing the benefit of the mature programs continuing to more than offset the additional costs they’re incurring.”
The new timeline matches what analysts had predicted, based on the average of nine estimates compiled by Bloomberg. Eight analysts had projected an average financial charge of about $360 million. Chief Executive Officer Jim McNerney has warned since July that the 747-8’s schedule was at risk.
Boeing rose 64 cents to $66.61 at 11:47 a.m. in New York Stock Exchange composite trading, after touching $67.97 for the highest intraday price since Aug. 10. The shares had climbed 22 percent this year before today.
Engineers are working on dozens of issues discovered since the 747-8’s maiden flight in February, Boeing Commercial Airplanes President Jim Albaugh said in an interview this week.
Some problems, such as buffeting around the wheel well on landings, have been resolved, while others are “addressable” and need more time, he said.
Engineers are testing software this week to correct unwanted oscillation, or vibration, during flight. They’re also redesigning the inboard aileron actuator, a system on the wings that helps the plane turn, after it moved up and down unexpectedly on one of the jets during testing.
Boeing has four freighters doing test flights from a base in Palmdale, California, because the 787 Dreamliner -- delayed by almost three years -- is using the Boeing Field testing center in Seattle. The test fleet was originally only supposed to have three jets. While Boeing had said that the 747-8’s initial woes were due to the Dreamliner siphoning away resources, Albaugh said the team is getting what it needs.
The first 747 rolled out of Boeing’s Everett, Washington, factory 42 years ago today. It was the world’s largest airliner until the Airbus SAS A380 superjumbo, which carries more than 500 passengers, entered service in 2007.
In November 2005, Cargolux Airlines International SA placed the first order for the $303 million 747-8 freighter, which has 16 percent more room for cargo.
The $300 million passenger version, called the Intercontinental, holds 51 extra seats, for a total of 467, and is scheduled to enter service with Deutsche Lufthansa AG at the end of 2011, a year later than planned. That target remains unchanged, Marc Birtel, a Boeing spokesman, said today.
The company is working on its 12th freighter in the wide- body factory in Everett, Washington and has begun building two Intercontinentals. The building, the world’s biggest by volume, was constructed specifically for the 747 in 1967.
Boeing spreads its costs to develop new planes over an initial pool of aircraft it expects to sell. If the anticipated expenses exceed the expected revenue, then the program is in what’s called a reach-forward loss position. Costs above revenue then have to be accounted for immediately even though they may not be incurred for some time. The 747-8 is only the second plane in Boeing’s 94-year history to have that accounting status.
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