Boeing Says Charges May Top $1 Billion

Boeing Co. said Thursday that it would take as much as $1.12 billion in second-quarter charges to settle a 3-year-old Justice Department investigation of its defense contracting and for newly disclosed delays to an international airborne surveillance system.

The nation’s No. 2 military contractor had announced the tentative legal settlement for $615 million with the government, relating to the hiring of former Air Force official Darleen Druyun and the alleged use of secret documents obtained from rival Lockheed Martin Corp. to win contracts.

But delays of as long as 18 months in its early-warning and control system aircraft emerged publicly Wednesday, when Australian Defense Minister Brendan Nelson voiced his disappointment about them and harshly criticized Boeing, the lead contractor on the project.

“I think Boeing has let the Australian government down, and I think they’ve let themselves down,” Nelson said at a Pentagon briefing. He added that he intended to ensure “that Boeing delivers on the project.”

Boeing said it expected to take a pretax charge of $300 million to $500 million related to the program, in which its 737-700 planes are outfitted with advanced radar systems. The program is known as Wedgetail in Australia and Peace Eagle in Turkey, another customer.

The delay was caused by development and integration issues with hardware and software components, the company said.

“This has been a very difficult technology program with an aggressive schedule,” Chief Executive James McNerney said.

Boeing shares rose 36 cents to $83.