Executive Briefings

Soon-to-Fly Dreamliner Sagging Under $16bn Glut in Inventory

Boeing Co., set to get government approval of its new 787 Dreamliner this week and deliver the first jet next month, expects to spend most of 2012 unwinding the record inventory built during three years of delays to the world's first composite-plastic airliner.

Boeing amassed $16.2bn worth of inventory related to the 787 through June 30, with so many almost-finished jets the company ran out of room to park them. There are 35 scattered outside the Everett, Washington, plant, in leased space across an adjacent airfield and in a facility in Texas. Many lack seats and lavatories and have black plastic over the windows and concrete blocks hanging from the wings to keep them from tipping over before engines are installed.

Even with U.S. Federal Aviation Administration approval expected Aug. 26 and first delivery due next month, most of the planes will sit for weeks and months more - boosting production costs because each needs different fixes and eating into returns on the capital invested. Boeing had to build a temporary factory inside a leased hangar in Everett to handle the extra load.

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Boeing Co., set to get government approval of its new 787 Dreamliner this week and deliver the first jet next month, expects to spend most of 2012 unwinding the record inventory built during three years of delays to the world's first composite-plastic airliner.

Boeing amassed $16.2bn worth of inventory related to the 787 through June 30, with so many almost-finished jets the company ran out of room to park them. There are 35 scattered outside the Everett, Washington, plant, in leased space across an adjacent airfield and in a facility in Texas. Many lack seats and lavatories and have black plastic over the windows and concrete blocks hanging from the wings to keep them from tipping over before engines are installed.

Even with U.S. Federal Aviation Administration approval expected Aug. 26 and first delivery due next month, most of the planes will sit for weeks and months more - boosting production costs because each needs different fixes and eating into returns on the capital invested. Boeing had to build a temporary factory inside a leased hangar in Everett to handle the extra load.

Read Full Article