Boeing Expects Pre Tax Charges In Difficult Times
Recession holds no boundaries in industry and the squeeze on companies both big an small can be felt across the globe and with Boeing announcing its figures and strategy many hold their breath to see how implications may affect them in the aerospace industry.
The Boeing Company has announced that it expects a pre-tax charge against third-quarter results of approximately 1 billion dollars due to ever increasing production costs in the industry and the difficult market place conditions currently affecting the 747-8 program.
Approximately 640 million dollars of these charges reflect higher estimated costs to manufacture the 747-8 planes at both Boeing and its supplier organisations. As the program assembled major components of initial 747-8 Freighters during the third quarter, it has become clear that late production of some of the engineering designs has led to a greater than predicted work load and disruptions in the production process. As a result of this additional resources have been tasked to the program and higher supplier expenses, which are the primary costing factors.
The remaining 360 million dollars of the charges relate to demanding market conditions and the organisations move to maintain the 747-8 production rate at 1.5 planes every month almost 2 years longer than originally planned, deferring an increase to two per month. Increased adoption of fixed expenses and volume related penalty to surrounding suppliers are the predominant factors of the additional costings
As the 747 development program is now in a loss making situation, costs related to these factors will be immediately presented in the third quarter for future 747-8 deliveries.
The company now predicts initial flight of the 747-8 Freighter to begin in ernest with the flight tests to occur in 2010. Initial delivery of the 747-8 Freighter is now predicted for the fourth quarter of 2010 with First deliveries of the Intercontinental passenger models scheduled for the fourth quarter of 2011.
Published by G&O Springs - Producing springs for the aerospace industry
October 6, 2009
