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Boeing warns U.S. shutdown could slow jet, defense deliveries
October 2, 2013 / 9:02 PM / 4 years ago

Boeing warns U.S. shutdown could slow jet, defense deliveries

NEW YORK, Oct 2 (Reuters) - Boeing Co is taking steps to deal with possible delays in jetliner deliveries, including its new 787 Dreamliner, caused by the federal government shutdown that has idled thousands of U.S. aviation officials needed to certify the planes.

The delays, if they started, would likely affect the plane maker’s newest models, such as the 787, and could affect development of other new models such as the stretched 787-9 derivative, the company said.

Older models like the 737, which don’t require significant engineering as part of the production, are less likely to be affected.

Boeing’s statement comes as other aerospace and defense companies are assessing their exposure to the shutdown. In cases where plants are operated in conjunction with government, such as the Abrams tank facility in Lima, Ohio, the furlough of workers such as government security guards could shut the factory, locking out the 900 private workers of General Dynamics

Boeing said the delays depend on how long the shutdown lasts and would worsen if the budget impasse persists. It also would affect numerous programs and products in the company’s defense business.

“We anticipate that we’ll be able to deliver some airplanes during the shutdown,” said John Dern, a spokesman at Boeing’s headquarters in Chicago.

“For models that we’ve delivered lots of before with the same engineering, we have the authority, delegated to us by the FAA” to certify, Dern added, referring to the Federal Aviation Administration.

“Newer airplanes and new configurations or those delivered from Charleston, those could be slowed or delayed during the shutdown.”

The slowdown would affect Boeing’s 787 factory in North Charleston, South Carolina, because the FAA has held on to come of its airplane certification roles at that relative new factory, Dern said.

Boeing said it was taking steps to deal with potential delays, but declined to be specific. “We’re working on developing and implementing contingency plans,” Dern said. “I can’t get into details. There are management teams working on this and they are keeping in touch with customers and suppliers.”

Investors are counting on Boeing to hit its target of up to 645 new jet deliveries this year, which would set a record for the company, and provide a mountain of cash flow that the company can use to buy back stock and pay dividends. Boeing’s shares have been rising this year in anticipation of the pay back on long-range development programs.

The company’s best-selling jet, the 737, is being produced at a rate of 38 a month, and since that is the least likely to be affected, it would cushion the blow if deliveries slow later in the year. Boeing aims to lift the rate of 787 production to 10 a month by year end, from 7 currently, and is in flight testing with the 787-9.

The FAA said on Wednesday it is furloughing 15,500 workers out of 46,000 employees. The agency said that while some aircraft certification work will continue during the shutdown, it will be limited.

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