Boeing Misses 2011 Delivery Target on 787 Delays as Airbus Beats Its Goal

Boeing Co. (BA) missed its aircraft delivery target in 2011 after shipping fewer 787 Dreamliners and 747-8 jumbo jets to customers than planned, while larger rival Airbus SAS topped its own higher goal.

The handover of three 787s and nine 747-8s by Dec. 31 was short of Boeing’s October goal of delivering a combined 15 to 20 because “we just couldn’t get all the work done on those airplanes to get them out the door by the end of the year,” Randy Tinseth, commercial-jet marketing chief, said in an interview today.

The deficit meant that Boeing delivered 477 commercial jets, less than an October projection for 480 that itself had been lowered from an earlier forecast. In contrast, Airbus beat its target and released more than 530 planes to customers, said two people familiar with the figures, who asked not to be identified since an official announcement is slated for Jan. 17.

“The shortfall of deliveries has reminded people that there are still challenges ahead” as Boeing works toward its goal of assembling 10 Dreamliners a month by the end of 2013, said Rob Stallard, an analyst (BA) with RBC Capital in New York who rates the stock “outperform.” Workers are currently building 2.5 a month.

The 787 was more than three years late after a series of delays when it was turned over to its initial customer, Japan’s All Nippon Airways Co., in September. The 747-8 was two years behind schedule when Cargolux Airlines International SA received the first one in October.

“Boeing has a good track record of consistently missing their own targets,” Stallard said.

‘Lumpy Deliveries’

Boeing fell 1.1 percent to $73.53 at 4:15 p.m. in New York trading. The shares climbed 12 percent last year.

For the composite-plastic Dreamliner, “we expect lumpy deliveries and are therefore not overly concerned with 3-4 deliveries slipping out of 2011 and into 2012,” Jason Gursky, a Citigroup Global Markets Inc. analyst, said in a note yesterday.

Timing is significant, because Boeing gets about 40 percent of the payments from airlines upon delivery.

All Nippon (9202) expected its third 787 to reach Japan today, after signing for the plane on Dec. 30, said Ryosei Nomura, a spokesman. The jet had been due in November but was held back by production delays.

The additional setback forced the Tokyo-based carrier to postpone the start of 787 services to Beijing by a month and disrupted the plane’s introduction on flights to Frankfurt.

A new 787 assembly line in South Carolina and the temporary surge line being constructed next to the initial one in Washington state are in good shape, Citigroup’s Gursky said.

New 787 Orders

That suggests Boeing can meet its production goal by 2013 once it finishes reworking jets built during the three-year delay to the plane’s entry into service, he wrote.

“Investors will likely shrug off the missed 787s, as 2012 has long been the real start-up year for deliveries,” Heidi Wood, an analyst with Morgan Stanley in New York, wrote today. “We project the delivery of 55 787s in 2012,” with about 40 built already that are already parked in Seattle, she wrote.

The company reported 25 new orders for the 787 today, without saying who had bought them. That made the final tally positive for the year, after 32 cancellations that previously outpaced 20 orders.

Deliveries are due to start this year of the 747-8 Intercontinental, the passenger version of Boeing’s biggest model, the planemaker has said. The first handover had been set for late 2011.

Airbus Deliveries

Chicago-based Boeing delivered 73 of its 777s, 20 767s and 372 of the 737, the world’s most widely flown plane.

Through November, Airbus had raked in 1,378 net orders, including about 1,200 firm purchases of the European company’s new A320neo, an upgraded version of the single-aisle jet. Boeing’s net-order tally was 805, and the planemaker said today it now has a total backlog of 3,771 aircraft.

Airbus delivered 477 planes through November, compared with Boeing’s 426. On that basis, Toulouse, France-based Airbus has surpassed Boeing every year since 2003.

Both planemakers are boosting production to work off record order backlogs, and Boeing last month began selling its upgraded 737 MAX jet to counter the success of Airbus’s A320neo.

Boeing expects 2012 to be the third year in a row that orders will surpass deliveries, lifting the backlog even further, Tinseth, the marketing chief, said. Last year’s figure included a record number of 200 777s, and that plane will still sell well this year though the 737 MAX will be “the shining star,” he said.

Boeing has orders and commitments for more than 1,000 737 MAXes from 15 customers, he said.

“Whereas 2011 belonged to Airbus thanks to the neo, we expect 2012 to be the ‘Year of Boeing’ due to robust orders, production rates, cash flow, and deliveries,” Gursky wrote.

To contact the reporter on this story: Susanna Ray in Seattle at sray7@bloomberg.net

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

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