EVERETT — The Boeing Co. made a $1.1 billion profit during the third quarter but trimmed its projected 2008 earnings due to delays in delivering its first 787 Dreamliner jetliners.
The aerospace and defense company reported its best quarter in years on Wednesday, buoyed by a 9 percent boost in commercial jet deliveries over the same quarter last year. With a $295 billion backlog companywide, Boeing increased its revenue projections for 2007 to $66 billion.
But the news out of the company’s Chicago headquarters wasn’t all good. Boeing lowered its revenue expectation for 2008 based on a six-month setback to its 787 Dreamliner program.
Shares of Boeing stock dropped nearly $2 in early morning trading but closed at $94.26 Wednesday, down 69 cents.
Earlier this month, Boeing pushed back the delivery of its first 787 to Japan’s All Nippon Airways by six months to November or December 2008. The company said its fuel-efficient Dreamliner will take its first flight by end of the first quarter of 2008, not before the end of 2007 as expected.
Boeing ran into trouble putting together the initial Dreamliner in Everett after suppliers sent components at varying levels of completion. The company is relying on partners from around the world to ship major pieces of the fuel-efficient jet to Everett.
“We were surprised on the physical reality of some things,” said Jim McNerney, Boeing’s chief executive, during a Wednesday conference call with analysts and media.
McNerney outlined a few steps the company has taken to get its delayed Dreamliner back on track. The first involved a shake-up in management.
Last week, Boeing replaced 787 Vice President Mike Bair with Pat Shanahan, who recently served as a vice president in Boeing’s defense program. McNerney gave Bair credit for overseeing the 787, which has won 710 orders from 50 customers. However, McNerney suggested that Shanahan has the skills and experience needed to deliver the Dreamliner.
The company also has sent “hundreds” of employees with manufacturing or procurement expertise to 787 partner sites, such South Carolina’s Vought Aircraft Industries, Italy’s Alenia Aeronautica and Japan’s Mitsubishi Heavy Industries. Boeing had employed this strategy earlier in the 787 program, dispersing engineers around the world to oversee design and early production work.
Over the next few weeks, Boeing and Shanahan will finalize a plan with 787 suppliers for future shipments. The plan not only covers when suppliers will send major assemblies to Everett but also outlines how complete each piece will be when shipped.
Boeing intends to catch up from the setback by early 2010, carrying only three delayed 787 deliveries into that year. To do so, Boeing’s supply chain continues to produce parts even though Boeing hasn’t completed fully the first Dreamliner. For instance, Spirit Aerospace in Kansas has roughly 10 Dreamliner barrels in production.
“We never turned off the supply chain,” McNerney said.
For its part, Boeing will have dozens of Dreamliners parked at Paine Field and inside the Everett plant before the company delivers its first 787 next winter.
The setback means more jobs at Boeing’s Everett facility — though McNerney doesn’t foresee a large number of new employees for the line.
“We’re going to need some labor over the coming months to accommodate the traveled work,” McNerney said.
And Boeing has robbed temporarily other new plane programs of engineers in order to solve issues on the 787. The company also hopes to certify its 777 Freighter next year, but McNerney acknowledged that program could be affected by the Dreamliner delay.
“That is the only potential conflict I see,” he said.
Boeing likely faces charges from some 787 customers affected by the delay. James Bell, Boeing’s chief financial officer, said the company is working with airlines.
“They are obviously not pleased,” Bell said.
Both Bell and McNerney insisted that customers still remain “enthusiastic” about the 787. Ultimately, Bell said, “we don’t believe we are going to have a fatal issue with a customer.”
At most, Boeing will deliver three or four Dreamliners next year, McNerney said. By the end of 2009, the aerospace giant intends to deliver a total of 109 787s.
“Obviously it was a very solid quarter driven by the commercial aircraft division, but investors are more focused on the outlook for 2008 and beyond,” said Edward Jones analyst Matt Collins. “The $100 billion question is when can they deliver the 787.”
The Associated Press contributed to this report.
Reporter Michelle Dunlop: 425-339-3454 or mdunlop@heraldnet.com.
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