McDonnell Douglas’ Net Off 6% in Quarter
Two major diversification ventures by McDonnell Douglas--into helicopters and commercial electronics--continued to experience problems in the second quarter and significantly depressed the parent company’s profit.
The St. Louis-based aerospace firm earned $81.2 million on sales of $3.2 billion in the quarter ended June 30, a 6% decline in earnings on a 13.2% increase in sales from the year before.
McDonnell took a $13.7-million charge against earnings on the Apache helicopter program at McDonnell Douglas Helicopters Co., formerly Culver City-based Hughes Helicopters. The charge follows a $47.9-million charge against earnings in the first quarter.
The Apache, an Army attack helicopter, has fallen behind schedule owing to earlier production problems and two groundings of the fleet this year, according to Army officials. The Army grounded the Apache for three weeks in late January when it discovered hairline cracks in trim tabs on the ship’s main rotor blade. The problem was caused by a tool used to adjust the tabs by bending them, a McDonnell spokesman said.
A more serious problem was discovered in March when one of two bolts that secure the flight control support assembly to the fuselage broke in an incident at Ford Rucker, Ala. The ship landed without damage or injury to its crew, but the Army determined that the flaw could affect flight safety and ordered a 4 1/2-week grounding.
Under its fixed-price contract, McDonnell Douglas incurred the cost of correcting both problems, company spokesman Rob Mack said. So far, McDonnell has delivered 111 Apaches out of 675 that were originally due by 1988.
It now appears that the last one will not be handed over until the early 1990s.
Meanwhile, McDonnell’s information systems group posted a $19.2-million loss, which the company said “compares favorably” to a loss of $23.8 million in last year’s second quarter. The unit lost $41.1 million in the first quarter of 1986.
The Douglas Aircraft unit of McDonnell continued to show improvement. As of June 30, the MD-80 jetliner program had 183 firm orders, 248 conditional orders or options and 307 deliveries, for a total of 738 aircraft.
