Boeing Backlog Grows, Delaying Deliveries

Boeing Co. said assembly-line bottlenecks will further delay delivery of more airplanes, possibly hurting earnings longer than expected as the company seeks to increase its capacity and efficiency.

Boeing said in September that 12 jetliners would be delivered late, but in the fourth quarter. The backlog has grown, the delays now affect more than 10 customers and delivery of some of the aircraft will be in 1998, meaning greater penalty payments, said Steve Smith, a company spokesman.

The latest disclosure is likely to further test the patience of analysts and investors, who were stunned last month when Boeing reported a third-quarter loss of $696 million after a $1-billion charge to cover backlog-related problems. It also may hurt Boeing’s share price, already near a 52-week low. Still, analysts say, the damage won’t be permanent if management gets production back on track and there are no more unpleasant surprises.

“It’s definitely going to be impacting the number of planes contributing to earnings,” said Prudential Securities Inc. analyst Nicholas Heymann, who recently cut his rating on Boeing to “hold.” “But it’s not a catastrophe until it means they can’t position themselves to be efficient, on time and profitable by the end of 1998 and into 1999.”

A one-month shutdown of production lines for the 747 jumbo jet and 737 jetliner has lengthened the delays announced in September, Smith said. Assembly-line problems have grown as Boeing struggles to double production over 18 months, reaching 43 planes a month by the second quarter of 1998.

A shortage of parts and skilled workers, together with late-delivery penalties on the backlogged jetliners, will mean $2.6 billion in pretax charges from the third quarter of 1997 through 1998, Boeing said.

In a related development, Boeing is expected to announce the future of McDonnell Douglas operations today following the $16.3-billion takeover of the former aerospace rival.