Friday, February 24, 2012

United Asks Boeing to Pay for 787 Delays

The Wall Street Journal

CHICAGO—United Continental Holdings Inc. said in a federal filing that it wants Boeing Co. to pay it for delayed deliveries of the new 787 Dreamliner jet.

The world's largest airline by passenger traffic said it is in talks with the plane maker "over potential compensation," but isn't able to estimate "the ultimate success, amount of, nature or timing of any potential recoveries from Boeing" over the delays.

The Chicago-based carrier still expects to receive five Dreamliners this year, it said in its annual report filed this week with the Securities and Exchange Commission. The airline in October narrowed its expectations for its 2012 Dreamliner deliveries to five from six.

Continental was the North American launch customer for the plane, placing an initial order for 10 Dreamliners in 2004. Those deliveries were slated to begin in 2009. In 2007, Continental upped its order to 25. At one point, deliveries were expected to begin in 2011. Now it is hoping to receive the initial five in the second half of this year.

United's 25 firm orders were slated for delivery from 2016 through 2019.

United Continental declined on Friday to comment beyond its SEC filing. A Boeing spokesman said the jet maker doesn't comment on discussions with customers as a matter of practice.

Chicago-based Boeing made its first delivery of the delay-plagued Dreamliner in September to launch customer All Nippon Airways Co. of Japan. The delivery came more than three years behind schedule because of design and production problems that resulted in billions of dollars in cost overruns. Boeing has compensated a number of airlines for failing to deliver the plane on schedule.

Boeing is under pressure to sharply increase deliveries of the Dreamliner to reduce a backlog of more than 850 planes. The 787, which is more fuel efficient than previous Boeing models, is the first big commercial jet made largely from plastic reinforced by carbon fiber, instead of aluminum.

Earlier this month, Boeing discovered a production flaw with its Dreamliner fuselages, and has acknowledged the problem may result in some short-term delays in deliveries of the twin-aisle jet. Boeing has said "incorrect shimming" was done on the rear fuselage sections made at a Boeing facility in South Carolina. Shims are used to fill in tiny gaps between jet parts.

Jim Albaugh, chief executive of Boeing's commercial-airliner unit, said this week that the defect potentially could affect the first 55 Dreamliners the company produced. The defect takes 10 to 14 days to repair on each plane, another top Boeing official said this week.

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