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

Reuters

By Alwyn Scott

NEW YORK, Oct 2 (Reuters) - Boeing Co is taking stepsto deal with possible delays in jetliner deliveries, includingits new 787 Dreamliner, caused by the federal governmentshutdown that has idled thousands of U.S. aviation officialsneeded to certify the planes.

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

Older models like the 737, which don't require significantengineering as part of the production, are less likely to beaffected.

Boeing's statement comes as other aerospace and defensecompanies are assessing their exposure to the shutdown. In caseswhere plants are operated in conjunction with government, suchas the Abrams tank facility in Lima, Ohio, the furlough ofworkers such as government security guards could shut thefactory, locking out the 900 private workers of General Dynamics

Boeing said the delays depend on how long the shutdown lastsand would worsen if the budget impasse persists. It also wouldaffect numerous programs and products in the company's defensebusiness.

"We anticipate that we'll be able to deliver some airplanesduring the shutdown," said John Dern, a spokesman at Boeing'sheadquarters in Chicago.

"For models that we've delivered lots of before with thesame engineering, we have the authority, delegated to us by theFAA" to certify, Dern added, referring to the Federal AviationAdministration.

"Newer airplanes and new configurations or those deliveredfrom Charleston, those could be slowed or delayed during theshutdown."

The slowdown would affect Boeing's 787 factory in NorthCharleston, South Carolina, because the FAA has held on to comeof its airplane certification roles at that relative newfactory, Dern said.

Boeing said it was taking steps to deal with potentialdelays, but declined to be specific. "We're working ondeveloping and implementing contingency plans," Dern said. "Ican't get into details. There are management teams working onthis and they are keeping in touch with customers andsuppliers."

Investors are counting on Boeing to hit its target of up to645 new jet deliveries this year, which would set a record forthe company, and provide a mountain of cash flow that thecompany can use to buy back stock and pay dividends. Boeing'sshares have been rising this year in anticipation of the payback on long-range development programs.

The company's best-selling jet, the 737, is being producedat a rate of 38 a month, and since that is the least likely tobe affected, it would cushion the blow if deliveries slow laterin the year. Boeing aims to lift the rate of 787 production to10 a month by year end, from 7 currently, and is in flighttesting with the 787-9.

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

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