August 14, 2009 / 10:53 AM / 10 years ago

Flaws halt work on Boeing 787 sections

CHICAGO (Reuters) - Boeing Co (BA.N) said on Friday an Italian supplier stopped production in June on two sections of its long-delayed 787 Dreamliner after structural flaws were found on fuselages.

A man looks at a scale model of Boeing's 787 dreamliner at their booth at the Singapore Air Show in Singapore February 19, 2008. REUTERS/Vivek Prakash

Alenia Aeronautica halted production because of wrinkles in the fuselage skin caused by flaws in subcomponents of the one-piece composite barrel, said Boeing spokeswoman Loretta Gunter.

While the company said this revelation does not affect the timetable for its first 787 test flight or deliveries of the aircraft, Boeing shares fell more than 4 percent to $44.61 on the New York Stock Exchange, making it the top decliner on the Dow Jones industrial average .DJI.

“Two months ago they stopped production on (the sections),” said Alex Hamilton, analyst at Jesup & Lamont. “I would argue that it’s already baked in. I think it’s just more bad news.”

“That’s what the stock is reacting to,” Hamilton said. “The perception from investors is it’s getting worse and worse.”

Flaws were found on 23 airplanes, starting with the seventh in production, Gunter said. She said a solution has been designed and patches will be applied to all the planes built so far.

“They’re continuing to work on the barrels that they have already fabricated,” Gunter said.

“As we implement this change, we are not going to produce any new barrels until there is an engineering change that will keep the subsequent units from needing to be modified,” she said.

The revolutionary carbon-composite 787 airplane has been delayed repeatedly. On June 23, the same day as the Alenia Aeronautica production halt, Boeing announced another delay to the first test flight of the 787.

The company has not set a new target date for the flight. Airlines with orders for the airplane are eager for an updated delivery schedule. Boeing data show 850 orders for the airplane.

Alenia Aeronautica, a unit of Italy’s aerospace and defense company Finmeccanica SpA SIFI.MI, is supplying 14 percent of the fuselage of the 787.

“ any case the (developments) have not had and will not have any effect on the timing of the first flight of the 787, on the certification of the aircraft or on the start of deliveries to clients,” Finmeccanica said in a statement.

The company is a key player in the development of the 787 aircraft’s main structure and builds carbon fiber pieces for the aircraft.

Reporting by Kyle Peterson, additional reporting by S. John Tilak in Bangalore and Gavin Jones in Rome; Editing by Derek Caney, Gerald E. McCormick and Bernard Orr

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