Overseas Suppliers May Put Program Behind Schedule

A communication to investors from Wachovia analysts reported in MarketWatch suggests Boeing's major suppliers Mitsubishi and Alenia have fallen behind schedule, and could delay deliveries for its 787 Dreamliner by as much as six months.

Mitsubishi is building the 787's wings, while Alenia is Boeing's 787 center fuselage supplier. Wachovia warns if the program isn't delayed, at the very least it will see significant cost overruns.

"It is our understanding that Mitsubishi has caught up a bit but is still behind schedule. Alenia by contrast appears to be the major culprit at this time, and we understand that Boeing has sent an army of engineers to help get the program back on track," the brokerage wrote in a note to clients.

Boeing's shares reportedly fell three-percent on the news Monday.

One of Boeing's biggest gambles with the 787 -- aside from the jet's all-composite construction -- is the company's decision to outsource major portions of its construction, many to overseas manufacturers. The company has even developed a specially modified 747-400, called the Dreamlifter, to transport major components built overseas back to its factory in Washington for final assembly.

Wachovia also wrote in its note to investors some of Boeing's Asia-Pacific customers have been warned to expect delays.

Most industry observers blame Airbus' order race loss to Boeing last year on the European manufacturer's two-year delivery delay with its A380 program.

A Boeing representative wasn't available for comment Monday on the MarketWatch story, although the company is expected to give a 787 delivery schedule update when it announces earnings results January 31.

FMI: www.boeing.com