Published: Wednesday, September 1, 2010
Boeing won't buy supplier
The Italian firm Alenia Aeronatica, a supplier for the 787, has had problems producing horizontal stabilizers.
The Boeing Co. isn't likely to buy out its 787 supplier, Alenia Aeronautica, the jet maker's chief financial officer said Tuesday.
"We're not going to buy Alenia," said James Bell, Boeing's CFO, during a Morgan Stanley conference Web cast live.
Italy's Alenia has been the source of workmanship issues. In late June, Boeing had to ground its 787 test fleet as a result of flawed horizontal stabilizers shipped by Alenia. The previous June, Boeing also had instructed Alenia to stop work on the 787 fuselage section it supplies when shipments of that section showed wrinkling of the structure's composite material.
"The way you handle supplier problems is not to buy them," Bell said.
But Boeing has bought out troubled suppliers on the 787 in the past. Last year, Boeing acquired 787 partner Vought's Dreamliner operations in South Carolina when that supplier suffered repeated troubles. Boeing also bought out both Vought's and Alenia's ownership of Global Aeronautica, where the 787's mid-fuselage sections are joined and systems installed, in South Carolina.
"We will be looking at options," Bell said. "Alenia clearly is struggling."
Alenia has acknowledged that its first 200 shipments of 787 parts will be at very low profitability. Boeing is more than two years behind schedule with delivery of its first 787 and announced last week that the jet won't be delivered until at least mid-February 2011.
Bell refrained from giving specific profitability predictions on the 787 when it's delivered next year. Instead, he said that the company will know more when Boeing hits peak production, of 10 aircraft monthly, in 2013. Suppliers such as Alenia are currently producing at a rate of about two and a half 787s monthly.
Despite delays to the Dreamliner, "I think our customers understand what we're dealing with and, for the most part, have stayed with us."
Boeing has more than 840 orders for its 787. Shares of the aerospace company closed Tuesday at $61.13, down 97 cents.
"We're not going to buy Alenia," said James Bell, Boeing's CFO, during a Morgan Stanley conference Web cast live.
Italy's Alenia has been the source of workmanship issues. In late June, Boeing had to ground its 787 test fleet as a result of flawed horizontal stabilizers shipped by Alenia. The previous June, Boeing also had instructed Alenia to stop work on the 787 fuselage section it supplies when shipments of that section showed wrinkling of the structure's composite material.
"The way you handle supplier problems is not to buy them," Bell said.
But Boeing has bought out troubled suppliers on the 787 in the past. Last year, Boeing acquired 787 partner Vought's Dreamliner operations in South Carolina when that supplier suffered repeated troubles. Boeing also bought out both Vought's and Alenia's ownership of Global Aeronautica, where the 787's mid-fuselage sections are joined and systems installed, in South Carolina.
"We will be looking at options," Bell said. "Alenia clearly is struggling."
Alenia has acknowledged that its first 200 shipments of 787 parts will be at very low profitability. Boeing is more than two years behind schedule with delivery of its first 787 and announced last week that the jet won't be delivered until at least mid-February 2011.
Bell refrained from giving specific profitability predictions on the 787 when it's delivered next year. Instead, he said that the company will know more when Boeing hits peak production, of 10 aircraft monthly, in 2013. Suppliers such as Alenia are currently producing at a rate of about two and a half 787s monthly.
Despite delays to the Dreamliner, "I think our customers understand what we're dealing with and, for the most part, have stayed with us."
Boeing has more than 840 orders for its 787. Shares of the aerospace company closed Tuesday at $61.13, down 97 cents.
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