Boeing Co. (BA)’s plan to ship the first of its newest jumbo jets by mid-2011 as part of the “Year of the 747” risks another delay that would add to the 18-month setback for the plane, two analysts said.
The 747-8 “may miss its ‘near midyear’ delivery target by 6-8 weeks due to minor ‘issues,’” Cai Von Rumohr, a Cowen & Co. analyst in Boston, wrote in a May 20 note to investors. JPMorgan Chase & Co. (JPM)’s Joseph Nadol said the same day he also sees a possible delay for the plane.
While Chicago-based Boeing’s timeline calls for the 747-8 to reach its launch customer in the middle of this year and for the 787 Dreamliner’s initial delivery by September, the 787 is ahead of the jumbo jet in Federal Aviation Administration testing. The Dreamliner is running more than three years late.
“The 747-8 has flown under the radar,” Nadol wrote. He said the jet may attract more attention during Boeing’s investor meetings starting today in Seattle, “and not necessarily of the good kind.”
Boeing expects to meet its midyear delivery goal, said a spokesman, Jim Proulx. The 747-8, the fifth variant of the 41- year-old jumbo jet, stretches the iconic hump on top and features new engines and a longer wing.
Von Rumohr, who along with Nadol recommends buying Boeing shares, said his prediction for a delay doesn’t include the one- month halt to the 747-8 production line in Everett, Washington, that the company announced on May 6.
The jets are being kept in place on the assembly line through June 7 as Boeing completes unfinished work, makes design changes prompted by 747-8 test flights, and prepares for a 2012 boost in output. Last year, Boeing sought to remedy buffeting around the wheel wells on landings and in-flight vibrations.
“Boeing is still ironing out issues with the aircraft,” Nadol wrote in a note. “We see a potential for a delay, but it may not be all that material to the stock.”
Boeing’s 19 percent gain this year to $77.52 through May 20 more than tripled the 6 percent advance of the Standard & Poor’s 500 Index, and outpaced the Dow Jones Industrial Average’s 8.1 percent jump. The shares fell $1.24, or 1.6 percent, to $76.28 at 4:15 p.m. in New York Stock Exchange composite trading.
Investors focus more on the Dreamliner’s progress than on the 747-8, Nadol and Von Rumohr wrote. The postponements on the 787, the world’s first composite-plastic airliner, led to some of the 747-8 delays as Boeing diverted engineers to help the twin-engine Dreamliner.
The four-engine 747-8 had only completed about 75 percent of the test conditions required for certification by the FAA as of Boeing’s first-quarter earnings call on April 27. That compares with about 95 percent of testing that had been done for the 787.
Cargolux Airlines International SA is to receive the first 747-8, a freighter. Boeing originally planned to have the cargo model enter service in late 2009. The passenger version had its maiden flight in March and is due to reach its first customer, a VIP buyer, by the end of 2011, a year late, and to enter commercial service in early 2012 with Deutsche Lufthansa AG. (LHA)
The plane has already forced Boeing to take $2.04 billion in charges amid delays that began in November 2008.
“While the program is not a critical investor focus item, it could become one if things are not going as planned,” a team of Barclays Capital analysts including Joe Campbell and Carter Copeland wrote in a May 20 note.
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