Boeing ‘confident’ on 787 schedule

Published 12:01 am Thursday, April 28, 2011

The Boeing Co. remains on track to deliver as many as 20 of its delayed 787 jets this year, company officials said Wednesday.

Boeing chief executive Jim McNerney said he’s “confident, very confident” in the company’s ability to hit its 787 delivery target, despite a massive amount of rework n

eeded to be done on 787s that already have been built.

McNerney’s comments came as the company reported a first quarter profit of $586 million, which topped analysts’ estimates. The aerospace giant said its earnings per share rose 11 percent in the first quarter to 78 cents per share from 70 cents per share in the first quarter last year. Analysts had expected Boeing to meet last year’s performance at 70 cents per share.

The company said its profit and earnings expectations for 2011 are unchanged. Boeing estimates full-year earnings per share at $3.80 to $4.

McNerney reaffirmed the company’s plan to deliver the first 787 in the third quarter. The mostly composite Dreamliner is running three years behind schedule due to problems with Boeing’s global supply chain and problems that Boeing found in flight testing. The company’s test 787s have accumulated more than 3,500 hours of flight in nearly 1,300 trips.

In order to hit its 12 to 20 delivery target this year on the 787, Boeing will deliver a combination of recently built Dreamliners and those that were built early on but need rework, which includes replacing fasteners throughout and adding a different sealant in the jets’ wings.

“These are things that we’ve all taken into account and are part of the plan,” McNerney said.

To incorporate the changes that Boeing has made in the 787 over the course of flight testing, Boeing has leased an additional facility at Everett’s Paine Field. McNerney described the rework operation as a “second production area” which will be needed through next year.

“There is a significant amount of work on the initial airplanes,” he said.

Boeing is still working its way through negotiations with 787 customers and suppliers for the jet’s tardiness, said James Bell, Boeing’s chief financial officer. He expects to wrap up talks this year as the first jet is delivered. Bell and McNerney declined to say how much the delays have cost the company. The company will give an estimate as to when the 787 will be profitable after first delivery.

In the long term, Boeing is eyeing other versions of its 787 to boost profitability, said McNerney, who didn’t elaborate. Boeing is introducing the 787-8 first, with the 787-9 to follow.

With the first delivery apparently on schedule, Barclays Capital analyst Joseph F. Campbell Jr. said he believes executives are turning their attention to speeding up production. Boeing is producing two 787s monthly with a plan to go to 10 monthly by 2013.

“In order to get this plane to quit losing money, they can’t build two a month. They need to move in the direction of 10 or 12 or 14,” Campbell said

Other program updates

Besides the 787, Boeing hopes to deliver the first freighter and passenger versions of its 747-8. Both versions of the upgraded jumbo jet are in flight testing. McNerney said the company is still on track to deliver the first 747-8 freighter mid-year.

Boeing gave few new details on the future of its Renton-built 737. The company continues to lean towards an all-new replacement for the single-aisle jet, McNerney said. But Boeing won’t make a decision on that jet until later this year.

“This is the year we have to harden up our plans,” McNerney said.

The company’s 777 line in Everett could be in store for another increase in rate. The 777 already is moving up to a pace of 8.3 aircraft monthly. But Boeing is “looking hard” at going higher, McNerney said.

As a result of recent production increases and the 787 rework, Boeing will continue its hiring spree in the Puget Sound area and in South Carolina, where the company plans to open a second 787 production line this summer.

In other Boeing news, the Federal Aviation Administration is increasing oversight at Boeing’s manufacturing sites in Everett and Renton, paying attention to the steps Boeing takes to prevent foreign object debris in jets. The move comes after Boeing disclosed to the FAA an incident on April 21 in which debris was discovered in a 767-300 fuel tank.

The company’s shares closed up 57 cents at $76.12 after hitting a 52-week high of $77.31 in early trading Wednesday.

The Associated Press contributed to this report.