First of New 747s Will Be Delivered Late, Boeing Says

Times Staff Writer

Boeing informed airlines Tuesday that initial deliveries of its new 747-400 aircraft will be delayed by an average of one month each as the result of unexpected manufacturing problems at the firm’s Seattle-area plants.

Boeing Commercial Airplanes President Dean D. Thornton said the company expects to return to its original schedule by the middle of next year. In the meantime, 21 customer airlines will not receive their aircraft on time.

Aerospace analysts said the delays would result in a small decrease in Boeing 1988 earnings and possibly those of 1989 as well.

“Investors are going to clobber Boeing’s stock,” said John Simon, analyst at Seidler Amdec Securities in Los Angeles. “The stock market does not like surprises and this is a negative surprise.” (Boeing shares ended at $66 Tuesday on the New York Stock Exchange. The company announcement was made after the market closed for the day.)


Boeing said it still expects to obtain Federal Aviation Administration certification of the model in December. The company said it will deliver two 747-400s that month, which is two fewer than it originally planned.

Since the company does not book revenues until it delivers an aircraft, the company will miss the sales and profits of two aircraft in fiscal 1988. That amounts to about $220 million in sales. The amount of profit is undetermined.

In addition, Boeing said there will be a substantial reduction in first-quarter 1989 deliveries, but the company expects to make up the shortfall in the second quarter.

Thornton blamed the situation on problems arising from higher than expected production for the new 747 line. In order to meet commitments, the company has boosted production from two a month to five a month.


A Boeing spokeswoman said the company had experienced problems earlier this year with deliveries from suppliers and with training adequate numbers of workers for the new program.

An additional problem on the new program is that customers have ordered several dozen different configurations of the aircraft, many more than were expected.

“These things are not untypical” for a new version of an aircraft, said Louis Gonda, executive vice president of Beverly Hills-based International Lease Finance, a major Boeing customer. “Boeing has had tremendous success with this airplane and it is partly that success that has caused this problem.”

A Boeing spokeswoman declined to say whether the delays would trigger penalty clauses in its sales contracts. Some contracts contain such clauses for certain types of delays.

Thornton said the firm is attempting to solve the problem by working overtime and reassigning additional experienced employees to the 747 production facility. That could drive up costs to some extent, analysts said.

“We have just completed a thorough review of the status of the 747-400 program and have determined we have no alternative but to revise the delivery schedule,” Thornton said.