Boeing, Airbus Face Parts Shortages, Perhaps Losses

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A shortfall of seats, galleys and toilets is causing production slowdowns at both Airbus and Boeing, raising costs for the manufacturers and delaying deliveries and payment from customers, according to a report by The Wall Street Journal. The delays have been present for nearly a year, but their impact this year spilled from new models into older production lines (Boeing's 777 and Airbus' A330) and may begin to affect both manufacturers' financial results as the manufacturers operate below planned efficiency levels. The problem has so far been blamed on the over-commitment of small suppliers that failed to match production with recent global demand for airliners. But the suppliers may not be the only parties to over-commit.

Thursday, Reuters reported that UAL Corp said it may cancel an order for 42 aircraft from Airbus, and therefore forfeit $91 million in deposits as the lesser evil as it faces difficult economic conditions that force changes in planned growth. Boeing on Thursday announced a cancellation (the first) of an order for its slow-in-coming 787 Dreamliner, which it hopes will eventually usher in new levels of operating efficiency for large airliners.