August 2012

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BREAKING: Boeing delays 747-8 first flight to early 2010, EIS now 4Q10 (Update1)

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This newly announced delay, FlightBlogger has learned, comes as part of a comprehensive status review of Boeing's commercial programs conducted by newly installed commercial airplanes chief, Jim Albaugh. In addition, program sources indicate the level of completion of tasks on the 747-8F required ahead of first flight stand at just 50%.

Boeing to Recognize Third-Quarter Charge for the 747 Program
CHICAGO, Oct. 6 /PRNewswire-FirstCall/ -- The Boeing Company (NYSE: BA) today said it expects a pre-tax charge against third-quarter results of approximately $1.0 billion due to increased production costs and the difficult market conditions affecting its 747-8 program.

Approximately $640 million of the charge reflects higher estimated costs to produce 747-8 airplanes at both Boeing and supplier facilities. As the program assembled major components of initial 747-8 Freighters during the third quarter, it became clear that late maturity of engineering designs has caused greater than expected re-work and disruption in manufacturing. This is resulting in additional resources being applied on the program and higher supplier expenses, which are the primary cost drivers.

The remaining $360 million of the charge relates to challenging market conditions and the company's decision to maintain the 747-8 production rate at 1.5 airplanes per month nearly two years longer than previously planned, deferring an increase to 2 per month. Higher allocation of fixed expenses and volume-based penalties to suppliers are the main drivers of the additional costs.

Because the 747 program is in a loss position, costs associated with the factors above will be immediately recorded in the third quarter for future 747-8 deliveries.

The company now expects first flight of the 747-8 Freighter to occur by early next year with the flight test program taking place in 2010. First delivery of the 747-8 Freighter is now expected in the fourth quarter of 2010. First delivery of the Intercontinental passenger variant remains scheduled for the fourth quarter of 2011.

This is a breaking story and will be updated.

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