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Boeing to feel little impact from train derailment -analysts
July 6, 2014 / 11:31 PM / in 3 years

Boeing to feel little impact from train derailment -analysts

NEW YORK, July 6 (Reuters) - Boeing Co will easily recover financially from a 19-car train derailment in Montana last week that sent three fuselages for its popular 737 jetliner tumbling down a steep embankment toward a river and damaged other plane parts, analysts said on Sunday.

The 90-car train was carrying a total of six 737 fuselages and pieces of Boeing 777 and 747 aircraft from supplier Spirit Aerosystems in Wichita, Kansas, when it derailed on Thursday about 18 miles (28.9 km) east of Superior, Montana.

But even if all of the parts are scrapped, the losses won’t produce more than a minor hiccup in Boeing’s production, analysts said.

“High on the annoyance scale, but not a major setback,” said Howard Rubel, a managing director at Jefferies LLC in New York.

The loss of six Boeing 737 fuselages “is equal to three days of production,” he said. “My guess is that Spirit could make up the disruption within a month with some overtime.”

Cai von Rumohr, a managing director at Cowen & Co in Boston, said the time available to catch up on the work and the likelihood that Boeing and Spirit have a production buffer made it unlikely that the parts losses would show up in Boeing’s full-year earnings.

The company is making 42 Boeing 737s a month, giving it plenty of scope to recoup six lost fuselages in six months, he said.

“And they just delivered 15 787s in June,” von Rumohr added. “That was the biggest worry item in whether they would reach their 2014 target.”

Boeing has forecast that it will deliver between 715 and 725 jetliners this year. Last week, Boeing said it delivered 342 jets in the first half of 2014. In all of 2013, it delivered 648 jetliners.

Boeing and Spirit have overcome disruptions before. A tornado that hit Spirit in 2012 put only a minor dent in output, even though it cut power and damaged Spirit buildings.

On Sunday, workers had already recovered the three fuselages that did not go down the embankment, said Lynda Frost, a spokeswoman for Montana Rail Link, a privately held company that operates the track where the accident occurred. The other three are likely to be recovered in the next two days, she said.

Montana Rail Link was still trying to remove the first of three flatbed cars that went down into the river with the fuselages as cargo, Frost said on Sunday afternoon.

“It’s going a lot slower than anticipated,” Frost said. “The embankment is so steep and the cars are heavy.”

Crews hope to have one car removed by Sunday night, she said.

The railcar-recovery efforts will continue until 7 p.m. Mountain Time in Montana and resume at 7 a.m. on Monday, Frost said. When that work is not being done, the rail line will operate.

The track was reopened for service on Saturday evening, but the speed limit was cut to 10 miles per hour (16 kilometers per hour), according to Frost. The company is still investigating the cause of the accident, she said.

The train originated with BNSF, but Montana Rail Link crews operate trains through that Montana route and BNSF takes them back in Idaho, BNSF spokesman Gus Malones said.

Spirit builds all of Boeing’s 737 fuselages. The company said it was working closely with Boeing following the incident.

Boeing said it had no further information on Sunday.

Reporting by Alwyn Scott; Additional reporting by Kevin Murphy in Kansas City; Editing by Jan Paschal

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