Boeing has said it expects to report a third-quarter loss, incorporating a charge of about $1.6 billion (£1.08 billion) incurred because of production problems, chairman and chief executive, Mr Phil Condit said yesterday.
The world's leading plane maker is to report its third-quarter results tomorrow and Mr Condit has forecast "continuing negative earnings impact" from the commercial aircraft segment through 1998. There may also be additional production disruption costs of about $1 billion before tax.
He said production problems on the commercial aircraft programmes reached "unexpected levels" in the third quarter.
Under a recovery plan announced early this month, 747 and 737 model production lines are being halted for about one month.
Boeing said costs associated with the recovery plans and late delivery costs would lead to a charge of about $1.6 billion before tax in the third quarter.
The company said that, in the middle of an unprecedented production rate build-up for its seven-series commercial aircraft programmes, it has experienced raw material shortages, internal and supplier parts shortages and productivity inefficiencies.
The Federal Aviation Administration said in Washington on Tuesday it would step up inspections of Boeing to ensure security wasn't being compromised by booming production.
FAA officials are concerned about the potential risk of assembly errors, by Boeing and by the organisation's contractors, who must juggle delivery delays with a record number of orders. Meanwhile, European Union Competition Commissioner, Mr Karel van Miert has instructed his department to examine a major long-term order placed by Delta Air Lines with Boeing, an EU spokesman said yesterday.
"Mr van Miert has given strict instructions to his services to check the contract," his spokesman said, adding this was part of the Commission's follow-up on a July decision to clear the merger between Boeing and McDonnell Douglas under conditions.
Under the terms of the approval, the Commission forced Boeing to scrap an exclusivity clause from supply contracts, signed with three US airlines including Delta.
