Breaking News

Tweet TWEET

Boeing Increases 777 Output Rate for Second Time Amid 787 Dreamliner Delay

Boeing Co. plans to boost output of the 777 jet 66 percent by 2013, a move that will add revenue as the planemaker prepares to announce a seventh delay to its 787 Dreamliner.

Production of the 777s will rise to 8.3 aircraft per month in the first quarter of 2013, the Chicago-based company said today in a statement. In March, Boeing said the manufacturing rate would rise starting in mid-2011 to seven planes a month from five now.

The increase is “a significant endorsement of global demand, especially from developing economies,” Peter Arment, an analyst with Gleacher & Co. in Greenwich, Connecticut, wrote today. He increased his earnings estimates for 2013 and 2014.

Boeing, which gets the majority of its revenue upon delivery of new jets, is increasing production for the twin- aisle 777 and the 737 single-aisle jet as demand recovers after the recession. Deliveries of those planes are providing Boeing’s main income stream as delays mount on the Dreamliner, now about three years behind schedule amid parts shortages, manufacturing mistakes and redesigns.

The Dreamliner’s seventh setback may be more than six months because of fresh problems, including last month’s electrical fire during a test flight, the Seattle Times reported today, citing unidentified people who work on or are familiar with Boeing’s new jet program.

Long-Haul Routes

The systems failures brought to light by the fire added to concerns related to the Rolls-Royce Group Plc engines used on some of the planes. The U.S. Federal Aviation Administration warned the company that certification for long-haul routes may be in jeopardy, the Seattle Times reported.

In addition, Boeing is struggling with continued manufacturing problems including heavy condensation inside the 787s that have already been built and are being stored outside the factory in Everett, Washington, the newspaper said.

The newspaper cited Scott Fancher, the head of the 787 program, as saying the company has “a tough job in front of us.” Boeing said Nov. 24 that it would announce its revised schedule for first delivery in a few weeks. The latest plan targeted the middle of the first quarter of 2011 for delivery to Japan’s All Nippon Airways Co.

777 Backlog

“There is no doubt we have a lot of work ahead of us,” said Yvonne Leach, a spokeswoman for Boeing. “What we’ve learned is being applied daily by our teams and in the planning for going forward.” The company expects “in coming weeks” to release a new timetable “that will accommodate the known issues and discoveries on the program -- including the work backlog that exists in the factory,” Leach said.

Gleacher’s Arment wrote in the note that the 787 design is sound and certification will slide by four to six months.

Boeing fell $1.88 to $63.15 at 2:03 p.m. in New York Stock Exchange composite trading. The stock had gained 20 percent this year before today.

The 777 is offered in a variety of configurations and seats more than 400. The average list price is about $258.2 million. Boeing has delivered 907 of the 777 aircraft since it entered service in 1995 and has an order backlog for more than 260 planes.

Boeing said in October that it was considering increasing production on the 737, the world’s most widely flown jetliner, to 40 a month from 31.5.

The twin-engine 737 aircraft rivals the A320 built by larger rival Airbus SAS. Airbus in the past month announced plans to offer new engines for the A320.

To contact the reporters on this story: Susanna Ray in Seattle at sray7@bloomberg.net; Will Daley in New York at wdaley2@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.