EVERETT – Riding on the news of their impressive fourth-quarter earnings, Boeing Co. officials reiterated Wednesday that the new 787 Dreamliner remains on schedule.
But they did acknowledge that Everett workers already have had to step into areas where suppliers have stumbled.
“We expect to deliver the 787 on time,” said Jim McNerney, chief executive officer and president of the Boeing Co.
To keep the plane on track for its first flight in August, Boeing has leaned on employees in Everett and will continue to do so. That’s just one of the contingency plans Boeing officials created to ensure the 787 program doesn’t befall the same fate as rival Airbus’s A380 line – a program that has suffered multiple delays.
McNerney and James Bell, Boeing’s chief financial officer, updated analysts and reporters on the company’s fourth quarter and 2006 year-end earnings as well as 787 progress during a Wednesday conference call.
In the final quarter last year, Boeing’s net earnings more than doubled from $460 million to $989 million. The company set a record for 2006 when its revenue rose 15 percent to $61.5 billion. However, Boeing’s 2006 net income declined 14 percent from $3.20 per share to $2.82 per share.
Boeing shares climbed $3.56, or 4.1 percent, to close at $89.56 on the New York Stock Exchange.
The company’s backlog continued to grow in 2006, rising from $205 billion to $250 billion. Included in that backlog are orders for the Dreamliner, which will go through final assembly in Everett. Just last week, an analyst’s speculation that Boeing’s Dreamliner is behind schedule – and that the company has reached its peak in orders – shot company stock downward.
Yet McNerney says Boeing has enough contingency plans in place to keep the 787 on schedule.
“We’re about where we thought we would be,” he said.
The company has loaned engineering support to struggling suppliers, including the three Japanese “heavies” – Fuji, Mitsubishi and Kawasaki – and Italian partner Alenia Aeronautica. And when those suppliers stumble, Boeing will shift work to either Everett or the company’s partners in South Carolina. The shifting of work hasn’t caused extensive contract renegotiations, McNerney said.
“It’s an ‘Oh-my-god’ exercise to build an airplane,” McNerney said.
By spreading the 787’s manufacturing across the world, Boeing has reduced some of that pressure on Everett to respond to every problem.
Boeing employees in Washington will be ready to build a variety of items – tubes, clips, brackets – should 787 suppliers fall behind schedule. Those items are associated with the installation of wiring for the 787’s in-flight network. Last week, Boeing announced that it scrapped a plan to use a wireless in-flight entertainment system and opted for the more-traditional wired system.
Since the decision was made so late in the schedule, Boeing will need its Everett workers to install the network wiring on the initial 787 planes. That doesn’t mean Boeing will add employees in the short term, said Lori Gunter, a spokeswoman for the program. Instead, workers will be paid overtime to get the job done.
There could be other work that will be shifted to Everett in the future, Gunter said.
Despite Boeing’s contingency plans and reassurances, most analysts believe the first 787, due to be delivered in May 2008, will be at least a little late.
“To develop a plane with that sort of technological innovation not even a couple weeks late would be unheard of,” Morningstar analyst Chris Lozier told the Associated Press. “I would be extremely, positively surprised if they delivered that plane even in June of next year. I would think when push comes to shove, there will be a couple of late inning kinks that need to be worked out of the program, as you would expect.”
Although Boeing has not made its decision on opening a second 787 production line – in Everett or elsewhere – to work off the program’s backlog, the company is steadily increasing production rates on its other lines, McNerney said.
Boeing’s backlog “indicates that our products and services are meeting the demands of our customers,” Bell said. Both executives though stressed the importance of increasing production prudently to make sure the company doesn’t overextend itself.
“There’s certainly an upward pressure on our rates,” McNerney said.
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