Boeing re-affirms 747-8 support despite charge

By Stephen Trimble

Boeing today announced a $685 million charge stemming from cost overruns and schedule delays on the 747-8 programme.

But Boeing executives also re-affirmed support for the commercial viability of the 747-8 despite receiving only one order so far from an airline customer for the passenger model.

"Obviously, we have applied a judgment that says we have a very competitive airplane here that has already got a good start on orders," Boeing CEO Jim McNerney told market analysts. "If we didn't believe the revenues would outweigh the costs we wouldn't go forward with it."

The 747-8 has so far accumulated 106 total orders, including 78 for the freighter and 28 for the passenger version - the 747-8 Intercontinental.

Lufthansa Airlines accounts for 20 of the 747-8I orders, with the balance coming from VIP sales.

In November, Boeing delayed the first 747-8F deliveries at least six months to the third quarter of 2010, and the 747-8I at least four months to the second quarter of 2011.

Boeing blamed the delays on a significant increase in engineering work due to design changes, and a shortage of available resources. The 57-day strike by machinists last year also contributed to the delay, Boeing says.

McNerney continues to stand behind Boeing's investment in the 747-8, but may still change his mind.

"We still see a viable business proposition here," McNerney says. "Now obviously if we ever got to a point where we didn't, we'd have to work with our customers to come up with another answer."