Boeing Buys Finmeccanica's Share of U.S. 787 Plant

Boeing Co. (BA) acquired Finmeccanica SpA's half of a venture that joins sections of the 787 Dreamliner's fuselage, giving the planemaker greater control over the delayed jet's assembly.

The facility near Charleston, South Carolina, "is critical to the success of the 787 program," Jim Albaugh, president of Boeing Commercial Airplanes, said today in a PR Newswire statement. The Chicago-based company didn't disclose financial details.

Alenia founded Global Aeronautica with Vought Aircraft Industries in 2004 to join four sections of the 787 that are then flown in a special "Dreamlifter" aircraft to Boeing's factory in Everett, Washington, for final assembly. The composite jet is built in pieces by vendors around the world in a new production process, which contributed to delays that have set it back two and a half years.

Boeing in June 2008 bought Vought's half of Global Aeronautica, adjacent to Vought's 787 operations in South Carolina. Boeing acquired those operations in July this year. In May, Boeing said it had helped clear up "bottlenecks" in South Carolina, where Global Aeronautica performs a "difficult body join" of the 787's rear- and mid-sections.

Dreamliner Components

Boeing last year had to strengthen the 787's center wing box. Fuji Heavy Industries Ltd. makes the wing box in Japan and ships it to South Carolina to be pre-assembled with the other three sections of the fuselage.

The former Vought factory makes the rear sections of the composite fuselage for the Dreamliner. Boeing decided in October to build a new factory, adjacent to the Vought and Global Aeronautica plants, to speed up Dreamliner production and counter the delays.

The Global Aeronautica purchase could further drain Boeing's cash reserves, depleted by a two-month strike by machinists a year ago at the company's Seattle manufacturing hub and by extra costs for the delays to the 787 and the 747-8 jumbo jet. The company had $6.6 billion in cash and marketable securities at the end of September, compared with $12.2 billion two years earlier. Earnings have been hit this year by billions of dollars in charges related to the setbacks.

Chief Financial Officer James Bell said Dec. 8 that operating cash flow will be flat next year. The magnitude of Boeing's "cash challenge" isn't fully reflected in analysts' expectations, JPMorgan (JPM)'s Joseph Nadol said in a note to investors yesterday , writing that cash flows will "remain an area of focus in 2010."

Maiden Flight

The first 787 test jet had its maiden flight a week ago, and the second test aircraft is due to fly for the first time today, depending on weather in Seattle. The original schedule called for a maiden flight in August 2007 and delivery to the first customer in May 2008. The plane is now due to enter service at the end of 2010.

The delays have also been difficult for Boeing's suppliers, which generally don't get paid until the jets are delivered.

Boeing, the world's second-largest commercial-aircraft maker, has orders for 840 Dreamliners valued at about $140 billion at average list prices, making it the company's best- selling new plane ever. The 787 is the first airliner to have a body and wings made mainly of composite plastics, which are lighter than traditional aluminum and help conserve fuel.

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