Boeing shares slip as planemaker addresses 787 issue
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Boeing shares slip as planemaker addresses 787 issue

www.reuters.com   | 06.02.2012.

(Reuters) - Boeing Co shares slipped on Monday, the day after the planemaker said it must correct a problem with a support structure on the fuselage of some of its carbon-composite 787s.
Boeing shares slip as planemaker addresses 787 issue

Boeing (BA.N) shares were down 1.2 percent at $75.43 in early trading. The company said the problem was not causing any immediate safety concerns and would not affect production rates.

But EarlyBirdCapital Managing Director Alex Hamilton said the problem could disrupt Boeing's effort to boost its 787 production rate to 10 planes per month by the end of 2013.

"We don't know if this will impact production," Hamilton said. "But if you have to go back and correct something and possibly change production going forward, it seems to have a good chance, in our opinion."

Boeing's 787 Dreamliner is the world's first commercial airplane made largely of lightweight carbon composites. The plane boasts greater fuel-efficiency than other airplanes on comparable missions.

Boeing, which is inspecting the airplanes, described the problem as "incorrect shimming" performed on a support structure on the aft fuselage. Shims are used to close tiny gaps in joints.

The plane, which entered service last year, is about three years behind its original schedule because of snags in the program's global supply chain. Nevertheless, it is a hit among customers. Boeing has taken more than 800 orders for the plane.

Some experts doubt that Boeing can hit its production rate target for the 787 by the end of next year.

"We have the issue well-defined and are making progress on the repair plan," a Boeing spokesman said on Sunday. "There is no short-term safety concern. Repairs, should they be needed, will be implemented in the most efficient manner possible."

All Nippon Airways (9202.T), the launch customer for the 787, said it had conducted checks and that its aircraft were still operating as normal.

RBC Capital Markets analyst Rob Stallard said the shimming issue spoke to the integrity of the composites used to make the 787, but he did not think it was a serious issue that would disrupt the program.

"When you think of the big problems we've seen on the 787 over many, many years, this just looks like noise," Stallard said. "I'm sure these things happen in the development programs all the time."

Boeing's chief rival, Airbus(EAD.PA), recently blamed a combination of manufacturing and design flaws for wing cracks on its A380 superjumbo. The company said it had found a simple remedy for the problem, easing concerns among analysts who had feared the problem could dog the European planemaker.

(Reporting By Kyle Peterson; Additional reporting by Timothy Kelly; Editing by Lisa Von Ahn)



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