Boeing [BA] yesterday announced a new flight-test and delivery schedule for its 787 Dreamliner aircraft program but said the initial flight-test planes have no commercial value given an extensive amount of rework to them, resulting in a $2.5 billion pre-tax charge that will be recorded in the third quarter.
Boeing said it would update its 2009 financial guidance when it reports third quarter results in October. The company left its guidance intact in June when it first reported yet another delay in the 787 flight-test program, this time due to a side-of-body joint needing reinforcement (Defense Daily, July 23). The company said yesterday that the 787 is not in a forward-loss position, meaning it expects the program to be profitable.
The first flight of the 787 is slated to occur by the end of this year and the first aircraft delivery is scheduled for the fourth quarter of 2010, more than two years later than the original schedule called for.
The forthcoming charge, which amounts to $2.21 earnings per share, is due to the costs of the first three flight-test planes in the program being reclassified from program inventory to research and development expense. Boeing said the charge will not impact its cash outlook going forward.
As for the fix for the side-of-body problem, Boeing said the first test plane and the static test unit have been prepared for the new fittings, with installation expected to begin within the next few weeks.
“This new schedule provides us the time needed to complete the remaining work necessary to put the 787’s game-changing capability in the hands of our customers,” Jim McNerney, chairman, president and CEO of Boeing, said in a statement. “The design details and implementation plan are nearly complete and the team is preparing airplanes for modification and testing.”