November 14, 2008 / 6:38 PM / in 9 years

Boeing agrees engineer contract, but 747 delayed

NEW YORK (Reuters) - Boeing Co (BA.N) reached a tentative agreement on a new contract with the union representing its white-collar engineers, but was forced to delay the latest cargo version of its 747 jumbo due to design changes and problems with suppliers.

The four-year contract agreement, which must now be approved by a majority of the 21,000 members of the Society of Professional Engineering Employees in Aerospace (SPEEA), looks set to avoid a second damaging strike at the plane-maker’s Seattle area plants.

Boeing is still trying to get its production lines up to speed after a 58-day strike by its 27,000-strong machinists union ended November 2.

SPEEA leaders, who have been in face-to-face talks with Boeing since October 29, are recommending the contract offer to their members. A mail vote will be conducted over the next 10 days, which should be completed before the current SPEEA contracts expire on December 1.

Earlier on Friday, Boeing said it was pushing back the schedule on the cargo version of its 747 jumbo by as much as nine months as it deals with design issues and problems with suppliers, aggravated by the machinists’ strike.

The delay was partly caused by a lack of engineering resources, Boeing said, as it has pulled much of its manpower onto the new 787 Dreamliner, which has its own set of problems and is now about 18 months behind schedule.

Boeing’s best-selling 737 is also facing production setbacks after it was discovered that some structural joining components had not been properly coated by a supplier.

The first 747-8 Freighter is now set to be delivered in the third quarter of 2010, Boeing said, rather than the previous target of late 2009. That chiefly affects Japan’s Nippon Cargo Airlines and Luxembourg’s Cargolux Airlines CLUX.UL, which made the first orders for the plane in 2005.

    Boeing has firm orders for 78 of the giant freighters, worth about $23 billion. The delay may not be all bad for customers, as a looming global recession looks set to reduce the amount of goods being flown around the world. Cargo operators will hope the economy has recovered by the time the planes are delivered in the second half of 2010.

    The passenger version of the plane, called the 747-8 Intercontinental, will now be delivered in the second quarter of 2011, rather than the previous target of late 2010, Boeing said.

    That is a blow for Germany’s Lufthansa (LHAG.DE), the only airline that has signed up to buy the 747-8 passenger version, ordering 20 in 2006, worth about $5.8 billion at list prices. Boeing’s business jet unit has also placed orders for eight of the planes, likely on behalf of wealthy clients or heads of state.

    The 747-8 is Boeing’s biggest plane, seating 467 passengers in a standard three-class layout. It is the nearest competitor to the 500-plus seat A380, made by EADS EAD.PA unit Airbus.

    Boeing shares closed down 4.9 percent to $41.04 on the NYSE, close to a 4-1/2 year low. The stock is down 52 percent this year, hurt by the wider sell-off, concerns about the buying power of struggling airlines and delays on the 787.

    Reporting by Bill Rigby

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