Another Damaging 787 Setback For Boeing

Boeing (NYSE: BA) says it has found more problems with its 787 Dreamliner. The company said it would inspect the plane for “workmanship” issues. There is apparently a problem with the aircraft’s horizontal stabilizers.

Boeing said that the repairs would take over a week for each plane, but indicated that deliveries would begin by year-end, a forecast many people don’t believe because of the many glitches with the Dreamliner.Work began in earnest on the Dreamliner when it was given the 787 designation in January 2005. The process of designing and building the plane has been plagued by supplier problems and work stoppages. Many analysts believe that Boeing management should have given union members a better deal more quickly to keep the project on track. Instead, the slowing of the work has cost the company revenue. Some customers have canceled orders and other have indicated that they expect price concessions because of the delays.

The most remarkable thing about the Dreamliner is that all the problems with the project have occurred under the management of Boeing CEO James McNerney, who took over in July 2005. He made $19.4 million last year, a number that many shareholders believe is excessive given the company’s problems.

The question comes up, once again, about how the Boeing board in good conscience can retain McNerney.

Douglas A. McIntyre