Boeing's Civil Struggles Continue

(MoneyWatch)  Two or three years ago the aerospace industry and media found it easy to pick on EADS and Airbus for the delays they were having with the A380 large airliner and its effects on the company's performance. Eventually the company got back on track and the aircraft went into service with its customers and the earnings and revenue recovered. Boeing is now facing similar issues with their two key new civil aircraft.

Both the 787 advanced airliner and the 747-8 cargo aircraft have seen their delivery schedules slip to the right as problems have arisen with their development and testing. These two aircraft will be the foundation of Boeing's civil programs for the next several years and they need to enter service. Due to the problems with the news cargo aircraft Boeing announced that they will need to take a $1 billion charge.

This is primarily due to a further year delay in the 747-8 which means that Boeing must pay its suppliers penalties for not meeting quantity requirements. The company is also spreading its fixed costs and these came in higher then planned. The 747 schedule has been disrupted again as the company began assembly and found that there needed to be further work on the assembly. There is a passenger version of the new 747 but that remains on schedule for 2011.

The 787 recently discovered a structural problem when it did more testing. This will require time to fix. This Boeing is the first largely composite large passenger aircraft and these kind of issues should be expected but it was hoped not so late in the manufacturing process. Boeing has also faced problems with the complicated plan it set up to have parts made all over the world and then flown to Washington where the final product is assembled. The company's management has already said that plan will not be considered for future projects as delays in the component manufacturers starting production and integrating the delivery schedule caused disruptions.

In 2008 Boeing had a revenue of over $60 billion so the charge represents less then two percent of that but the next few years will be challenging for the aerospace industry as the fallout from the world's economic recession and the budget problems facing many governments affect their business. As EADS demonstrated once the bugs are worked out with these two aircraft and they get into service Boeing will recover. Unfortunately that doesn't look like it will happen in the near future.