Boeing to pay $580M for 787 parts plant in SC

Boeing will pay $580M for a plant that makes large sections of its 787 jetliner, apparent effort to rein in supplier problems that have led to costly delays of the next-generation aircraft and hurt the company's credibility. The plant, owned by Vought Aircraft Industries, makes barrel-like sections of the 787's fuselage that fit between its wings and tail and are composed primarily of lightweight materials. Deliveries of the 787 were postponed by nearly 2 years partly because of problems with components made by suppliers & work suppliers not complete. Hang-ups are expected to cost the airplane maker billions of dollars in added expenses & penalties. Boeing took a new approach to building airplanes when it announced its 787 program in 2004. Instead of building the plane's parts in the U.S., it used suppliers around the world to build huge sections of the plane that's later assembled at its commercial aircraft plant in WA. Ill-fitting parts & other problems have hamstrung production ever since. Vought, owned by private equity firm The Carlyle Group, claims financial problems, not production glitches, prompted the sale, expected to close in the 3rd-Q. Under the deal, Boeing will release Vought from obligations to repay money advanced early by Boeing. Vought President & CEO Elmer Doty said his company's investment in 787 parts was far greater than expected, & financial demands of the program "are clearly growing beyond what a company our size can support." But Rich Aboulafia, analyst at the Teal Group, aerospace consultancy in Fairfax, VA said, "this clearly is more about securing the supply chain & undoing numerous mistakes. It's a good move, it's a proactive move, it undoes some damage. But on the other hand, it shows this program still has more than a few challenges to overcome. I don't think Carlyle quite knows what to do with this asset, & they might not be prepared to give it the necessary resources," he said. Despite the problems, Boeing spokesman Jim Proulx said Tuesday it has no plans to change its 787 production plan. "We remain committed to the business model & the global strategy for the 787," he said. The mid-sized, long-haul 787 will be able to carry between 210 to 330 passengers. Its design includes wider seats & aisles, larger windows & a ventilation system that will allow for higher humidity, all of which Boeing says will make the cabin feel more comfortable. It's Boeing's first all-new aircraft since the 777 & the first commercial jet made mostly of carbon-fiber composites instead of more traditional aluminum. Boeing says it will be 20% more fuel efficient than planes of comparable size. Chicago-based booked orders for a record 850 of the planes, but 60 were canceled so far this year, including the cancellation of 15 & delayed delivery of another 15 by Qantas Airways in June. Boeing said the acquisition of Vought's SC plant will boost its capacity to develop & build large plane sections made from carbon-fiber composites, lightweight material expected to make 787 more fuel efficient than other planes. Adam Pilarski, aviation economist with DC based consulting firm Avitas, said Boeing may want the Vought plant as part of a plan to start a 2nd 787 production line. The added capacity is in response to strong demand for the plane. "Boeing made it very clear they need a 2nd line. They need it more now than they did before because they are behind," he said. It remains unclear when Chicago-based Boeing will conduct the first test flight of the 787, previously scheduled for the 2nd-Q of 2009. Vought will continue to run other plants that work on different 787 components as well as parts for Boeing's 737s, 747, 767, 777, C-17 & V-22 aircraft. Boeing shares slid 4