By Doug Cameron
A shortage of seats and other parts for jetliner interiors has
slowed production of some commercial jets and now spread to the VIP
sector, delaying two new jumbo jets that are being converted to fly
foreign heads of state.
The jets are being converted by a unit of L-3 Communications
Holdings Inc. at its facility in Waco, Texas. The
aerospace-and-defense company didn't identify the planes involved,
but in 2012 said it won contracts to convert two Boeing Co. 747-8s
for use by heads of state. It said Thursday that problems in
securing interior parts and quality issues prompted the delay and
forced it to take a $17 million charge against first-quarter
earnings.
L-3's problems highlight the wider challenge faced by Boeing and
rival Airbus Group NV as they boost production of their commercial
jets. Both companies have wrestled in recent months with a shortage
of business-class seats, and delays in securing other interior
fittings, such as galleys and lavatories, can snarl factories or
force them to park partly finished planes.
Upsetting heads of state may be in a different league from
leaving airlines short of a new jet.
"I was especially disappointed about the head-of-state contract
losses," L-3 Chief Financial Officer Ralph D'Ambrosio said on a
post-earnings' call.
The 747-8 carries a list price of $368 million. Conversion to
VIP use can more than double or triple the cost and take two years
to complete. The plane has been selected by the U.S. government to
replace the existing fleet used by the president as Air Force One,
and heads-of-state planes usually include sophisticated
communications and defensive equipment, as well as plush
interiors.
Mr. D'Ambrosio said one of the jumbos had been delayed by six
weeks and was due to be delivered in late June, while the second
plane was three months behind schedule and expected to be taken by
its customer in December. The company declined to identify the
clients.
Boeing has secured nine orders for the VIP version of its
upgraded jumbo. The first jet started flying for its unidentified
customer earlier this year, while another seven are at conversion
centers.
L-3 employs around 2,000 staff at the Waco facility, which
converts military and VIP aircraft and was once owned by Chrysler
Corp.
The commercial industry's problem with interiors can also be
traced in part to the Lone Star State.
France's Zodiac Aerospace SA, a big seat supplier, amassed a
backlog of 6,000 unfilled seat orders, citing a monthlong strike
last year at its facility in Gainesville, Texas. The company has
reduced its backlog of seats to around 2,000, boosting production
to 700 a day.
Boeing said last week that a shortage of business-class seats
made by Zodiac had slowed completion of some 787 Dreamliners for
such customers as American Airlines Group Inc. and Etihad
Airways.
Airbus jetliner chief Fabrice Brégier said this month that it
was "unacceptable" some suppliers of cabin interior equipment have
suffered repeated production shortfalls. He called on them to boost
their "industrial maturity" to match that of the plane makers.
Robert Wall contributed to this article.
Write to Doug Cameron at doug.cameron@wsj.com
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