Boeing and buyer blame contract snag for 747 delay
BARCELONA, Spain (Reuters) - Boeing Co (BA.N) scrambled on Monday to iron out contract problems that forced it to postpone the first delivery of a stretched model of its iconic 747 jumbo jet, driving down its shares.
The U.S. planemaker was due to deliver the first freighter version of its significantly revamped 747-8 to Luxembourg-based freight carrier Cargolux CLUX.UL on Monday.
But in an embarrassing setback, it was forced to scratch a lavish three-day celebration, including a surprise musical act, after receiving a letter from the European carrier on Friday.
Boeing shares were down 3 percent, at $63.42 in afternoon trade on the New York Stock Exchange.
Both sides blamed "contract issues" for the delay, rather than the technical problems that pushed the program back about two years. A performance problem could have cast greater doubt over subsequent deliveries.
"We had a party planned for today," Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes, told a conference in Barcelona.
"We have some contract issues which need to be resolved and we are working on that," he told the ISTAT aircraft finance conference.
Cargolux, which has ordered 13 of the 747-8F jets worth $319 million each at list price, threatened to look for other aircraft if the dispute could not be resolved.
"In the event that the issues cannot be resolved in a timely manner, Cargolux will source alternative capacity to fully meet customer demand and expectations ahead of the traditional high season," it said in a statement.
The delivery delay came a day after the head of Qatar Airways took a board seat at Cargolux following the Gulf airline's decision to take a stake of just over a third in the Luxembourg-based freight carrier.
Aircraft analyst Scott Hamilton said the Cargolux delivery had become embroiled in a wider dispute between Qatar Airways and Boeing over late-delivery penalties for the 787 Dreamliner, Boeing's latest carbon-composite passenger jet.
Qatar Airways Chief Executive Akbar Al-Baker regards the penalty for delayed 747-8 deliveries as a benchmark for other future penalties, including on the 787 Dreamliner, the analyst said.
Boeing plans another lavish ceremony September 26-28 for the first delivery of the revolutionary lightweight 787 passenger plane to Japanese customer All Nippon Airways (9202.T).
The Cargolux delivery was due to be followed by other deliveries to airlines or freight carriers, culminating in a 467-seat passenger version later in the year.
"This is an embarrassing mishap, but it is a short-term hiccup, of many that have occurred," said Alex Hamilton, managing director with EarlyBirdCapital.
"The plane will be delivered, as we anticipate the 787 will be. What really matters ... will be the production ramps of those two aircraft," he said.
Boeing plans to deliver a combined total of 25-30 747-8 and 787 aircraft this year, a majority of which would be 747-8s.
Boeing's Tinseth, meanwhile, said the company expected to receive "hundreds" of fresh orders and commitments in coming months for its recently revamped 737 MAX narrowbody jet.
The planemaker has 496 commitments for the aircraft, which it hopes will rival a re-engined Airbus, the A320neo, which has notched up more than 1,000 orders and commitments.
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