By Christopher Hinton
Boeing Co. (BA) said Wednesday that some of its second-tier
suppliers in Japan were disrupted by the country's recent
earthquake, but alternative sources have been filling in and so far
there has been no impact to the aircraft builder's production
rate.
"Our major structural partners are well outside of the region
where the bulk of the damage occurred," said Boeing Chief Financial
Officer James Bell, during a J.P. Morgan Aviation, Transportation
& Defense Conference.
Major components for the Boeing 777 and 787 jetliners are built
in Japan by Mitsubishi Heavy Industries Ltd. (7011.TO), Kawasaki
Heavy Industries Ltd. (7012.TO) and Fuji Heavy Industries Ltd.
(7270.TO), in facilities around Nagoya, far south of the
earthquake's epicenter.
Shares of Boeing were recently up 1.4% at $72.86. The stock lost
more than 3% last week after Japan's earthquake and tsunami
threatened to disrupt the country's industrial output.
Disruptions in the 787 supply chain have led a near three-year
delay to the next-generation jetliner, a twin-aisle aircraft built
of lighter, carbon-composite material to reduce fuel consumption.
The aircraft is currently being certified and is scheduled for its
first delivery in the third quarter.
Boeing has said it made mistakes in its 787 supply chain by
relying too heavily on the engineering of others to spread the
development and risk for the new aircraft.
However, Bell said Boeing would nonetheless adopt the same
strategy for its popular 737 if it decides to re-design the popular
single-aisle jetliner, with modifications, because it helps to
lower costs as well as open foreign markets.
Meanwhile, Bell predicted improving cash flow throughout this
year, culminating in a possible dividend increase next year, along
with a possible stock-buyback program and paying off more debt.
The company, he said, may also consider "appropriate
opportunities" for acquisitions.
-By Christopher Hinton; 415-439-6400;
AskNewswires@dowjones.com