U.S. News

Airlines Downplay Impact of Boeing 787 Delay


British Airways, Japan's All Nippon Airways (ANA) and other buyers of Boeing's new 787  said Thursday the plane's delay would have little or no impact on operations.

In this hand hout computer-generated image provided by Boeing shows the company's new series Boeing 787 Dreamliner, Wednesday, April; 27, 2005. A senior Boeing Co. official on Wednesday brushed off the threat of European rival Airbus SAS's "superjumbo," saying orders for Boeing's smaller, more fuel-efficient Dreamliner were robust. (AP Photo/Boeing) ** EDITORIAL USE ONLY **

Boeing could face penalty fees for late delivery of the Dreamliner aircraft after revealing a six-month delay in its fastest-selling plane on Wednesday.

The news triggered a 2.7 percent fall in the stock's heaviest trade in almost a year.

It means the 787 will not fly tourists to the Olympics in Beijing next summer and prompted comparisons with rival Airbus which is set to deliver its first A380 superjumbo next week after costly delays put it two years behind schedule.

"For now, we don't expect it to have such a huge impact," said ANA spokesman Shinichi Shinkawa, adding the 787 launch customer was studying the matter.

Britain's Rolls-Royce, which will supply engines for ANA's 787s, said it expected no financial impact in 2008 from the delay in first deliveries.

"We are still confident we will get the first delivery in 2010," said a British Airways spokeswoman.

Australia's Qantas Airways, Air Berlin and Vietnam Airlines were among other 787 buyers who said for now the delay would be manageable.

"Boeing said the August 2008 aircraft would slip, but not by six months," Qantas Chief Executive Geoff Dixon said in a statement.

Dixon was a vocal critic of Airbus after the A380's delays, and Qantas last year said it had been paid 104 million Australian dollars ($94 million) in compensation stemming from the delay.

"Compensation issues will be the subject of commercial negotiations between the Qantas and Boeing companies," Dixon said regarding the 787.

Qantas is among the biggest buyers of the plane. Dixon said the airline has 65 on firm order, 20 options and purchase rights for a further 30.

ANA declined to comment on the matter.

A Boeing spokesman said: "We have assumed in our assessment the financial impact of any penalty payments which would be added into the cost base of the program."

The planemaker said there would be no "material" impact to earnings and left its forecasts for this year and next unchanged, saying by the end of 2009 it hoped to deliver 109 of the planes versus an original plan of 112.

Boeing blamed the setback on problems putting together the structure of the plane, compounded by a scarcity of some parts.

As recently as Monday, Boeing Commercial Airplanes Vice President Randy Tinseth had said that the timetable was still achievable.

"Boeing has now bitten the bullet and accepted that the schedule is beyond them. The firm has taken the only sensible move under the circumstances," Bank of America analyst Robert Stallard said in a note.

The 787 will use a innovative, lightweight carbon-composite fuselage and has been key to reviving Boeing's fortunes after Airbus surged ahead in orders and grabbed much of the world's attention with the A380.

With more than 700 orders to date, the 787 is the fastest selling airliner in history, and some 48 airlines and leasing companies are waiting to take delivery of planes worth more than $100 billion at list prices.

Shares in ANA closed down 1.72 percent at 457 yen ($3.90) while Qantas rose 0.34 percent to A$5.97.

BA was up 0.1 percent at 439-1/2 pence and Rolls-Royce was up 2.3 percent at 558-1/2p as of 8:30 a.m. ET.