Boeing Co , its reputation tarnished by the troubled 787 Dreamliner program, said on Tuesday that it would delay the first flight and delivery of its 747-8 Freighter, news that further eroded the credibility of the world's No. 2 plane maker.
The company also will take a massive $1 billion charge in the third quarter due to higher production costs and tough market conditions for its 747 program. The delay -- the second announced for the 747-8 this year -- pushes the first flight of the jumbo Freighter to early 2010 from the fourth quarter of 2009.
Boeing delayed delivery of plane to the fourth quarter of 2010 from the third quarter of 2010. Boeing, which has about 100 orders for 747-8s on its books at list prices between $293 million and $308 million, gets paid by customers at delivery.
They have so many issues with the 787 that it's taken their eye off the ball elsewhere, said Alex Hamilton, senior managing director at Jesup & Lamont.
I just think it speaks to the other programs, Hamilton said. This quarter they've already announced charges related to the 787. Now you have charges related to the 747.
The 787 Dreamliner, which is two years behind its original schedule, is set to fly by the end of 2009.
Shares of Boeing, a Dow component, were down 4 cents at $52.24 in early trade on the New York Stock Exchange. Boeing said it would update its 2009 financial outlook on October 21 when it reports third-quarter results.
Boeing said $640 million of the third-quarter charge reflects higher estimated costs to produce the 747-8. The company said late maturity of engineering designs disrupted manufacturing in the third quarter.
The remaining $360 million of the charge is linked to tough market conditions and the company's decision to maintain the 747-8 production rate at 1.5 airplanes per month nearly two years longer than previously planned.
Though not nearly as innovative or fuel-efficient as the revolutionary carbon-composite 787 Dreamliner, the 747-8 shares technology with the high profile 787.
The legendary 747 family has been in the air since 1969 and is Boeing's biggest and most recognizable commercial plane.
The 747-8, which uses new engine and wing designs, boasts greater fuel efficiency and lower operating costs than the Airbus A380, its closest rival, Boeing says. The Freighter can carry 16 percent more cargo than the previous 747 model, while the Intercontinental can carry 51 more passengers.
(Reporting by Kyle Peterson, editing by Dave Zimmerman)