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Friday, August 13, 2010

Boeing's new jumbo faces another delay

Boeing's revamped 747 jumbo jet may not be delivered to the first customer until next year after a fourth production delay, while the company has yet to decide whether to go ahead with updates of its 737 and 777 designs.

Handover of the 747-8 freighter could be postponed into January 2011 from the end of this year, Boeing Commercial Airplanes Chief Executive Officer Jim Albaugh said today at the Farnborough Air Show.

"I've been in development programs my whole life and I know things happen, and we don't have a lot of contingency left," Albaugh said, without giving a reason for the delay. The company had considered bringing a 747-8 test jet to Farnborough along with the 787 Dreamliner on display and decided otherwise to focus on more tests in Seattle.

Boeing has already delayed delivery of the 747-8 three times and last October posted a third-quarter loss after taking charges against the jumbo and the all-new Dreamliner. The Chicago-based company will reach a conclusion on adding new engines to the 737 single-aisle model by this fall, and is considering upgrading the 777 wide-body plane, Albaugh said.

Engine Options

Boeing, which had previously suggested a decision on the 737 might take until the end of the year, will base its strategy on demand and not the policies of other manufacturers, the executive said. Both Boeing and Airbus SAS have told airlines they may put more-efficient engines on current models as they seek to blunt momentum for new narrow-bodies being developed by Bombardier, China's state-owned Comac and Irkut of Russia.

"We're going to be market driven and not driven by the competition," Albaugh said, adding that Boeing held discussions with Southwest Airlines CEO Gary Kelly last week and that the US discount carrier will be "very involved" whatever the decision on the company's plans for a new engine on the 737 or an all-new single-aisle jet instead.

"I really don't think Southwest is locked in on any position," Albaugh said. "Whatever we do, it's going to be something that Gary Kelly likes."

Faster Production

Boeing is likely to accelerate production of the 737 to avoid losing orders to challengers such as Bombardier's new CSeries model simply because of the waiting time for its best- selling aircraft. Albaugh said yesterday he's talking with suppliers to see if they can support another production hike.

"If we can't come up to rate and people need airplanes, we could drive customers to buy the CSeries," Albaugh said today. "That's one of the reasons we want to increase the rate."

The company said at last year's Paris Air Show that it may build a new wing for the 777, improving fuel efficiency and allowing the plane to compete better with the A350 that Airbus will deliver in 2013.

"We're looking at some different things we can do -- the 777-X as we call it -- and there are a lot of things we could do for it," Albaugh said.

The 787's engines limit the new jet to 290 seats, while the A350 will have up to 350. A 777 with a redesigned wing could fill the spot left between the two planes.

Finmeccanica meanwhile said today that there is "no major issue" concerning its role as a supplier to the 787, which has been delayed by production glitches in part concerning assemblies produced by the Italian company.

Taking Out Risk

There is no problem with the horizontal part of the Dreamliner's tail, known as the stabilizer, Giuseppe Giordo, CEO of the company's Alenia aero-structures unit, said in a press briefing at the air show.

"It's the most advanced project in the world, so things can happen," Giordo said. "The stabilizer is fine."

Boeing last week said the Dreamliner's first delivery could slip to 2011 as well, from the target of the end of this year, which would already have been two and a half years late. Scott Fancher, the 787 program manager, said the delay was due in part to repairs and inspections needed because of poor quality of Alenia's horizontal stabilizers.

Boeing is trying to take risk out of the supply chain, Albaugh said.

"We have found a few issues and we've put our people in those facilities to make sure they're ready," he said. "We're getting parts from hundreds if not thousands of suppliers and any one of them could be the pinch point."

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