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15-Mar-2011 3:38 PM

Boeing monitors effect of Japanese earthquake on key B787 suppliers

Analysis

Boeing stated the Japanese earthquake and tsunami may have affected some of its suppliers, including those for the B787 programme. More than a third of B787 parts are manufactured in Japan, and Japanese suppliers also provide parts for the B777 and B767.

Initial reports indicate that there has been no major effect, but Boeing continues to assess the situation. Boeing has sufficient inventory to last several weeks before production issues arise. Suppliers in Japan include Fuji Heavy Industries, Kawasaki Heavy Industries, Mitsubishi Heavy Industries and Jamco Corp. Boeing has suspended business travel to Japan until airports and transportation systems return to more normal operations.

Meanwhile, Boeing has confirmed it is seriously considering increasing B737NG production to 42 aircraft per month to cut down on the aircraft's seven-year order backlog. B737NG production averages 31.5 aircraft per month and is due to be increased to 38 per month by 2013. Boeing believes the production life of the B737 family could stretch another two decades.

In aerospace shares, United Aircraft Corp shares fell 3.4%, while Safran shares dipped 3.1%. Bombardier was among the few upward movers, up 0.5%.

Selected Aerospace daily share price movements (% change): 14-Mar-2011

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