Boeing’s delivery delays, airline order cancellations and profit impact

An article in the Wall Street Journal (August 24, 2012) describes a decision by Quantas Airlines to cancel orders for 35 Dreamliner airplanes. Delivery delays meant that the promised 20% fuel efficiency and 30 % lower maintenance costs did not arrive in time to help Quantas’s profitability. At the same time, analysts suggest that Boeing loses $100 million for each plane delivered due to penalties and cost overruns. In addition, other analysts suggest that the order book had 30 to 40% more planes than the industry needs. Is this dismal performance the result of an aggressive design or an unwieldy global supply chain ? Could more effective manufacturing management have prevented this purported outcome ? Or is this the result of a global slowdown in economic activity, that would have occurred independent of Boeing’s actions?

About aviyer2010

Professor
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