Boeing faces delayed payments from customers
British Airways wants to renegotiate its terms with Boeing (BA) for buying the delayed Dreamliner. This is likely just the beginning of Boeing's troubles with its Dreamliner customers.
An exclusive report in The Wall Street Journal says that "British Airways Chief Executive Willie Walsh said in an interview in London he is seeking to delay cash payments that all airlines make to Boeing and its European rival Airbus as new planes are being built."
British Airways and other airlines have a relatively strong case. They have been counting on the fuel-efficient Dreamliner to replace planes in their aging fleets. Everyday that the Dreamliner is delayed is a day that costs the carriers in fuel costs.
Boeing's leverage with its customers is limited. Eventually, if the launch of the Dreamliner is delayed again, Boeing could face outright cancellations. Renegotiating payment terms may be the only recourse the airplane manufacturer has to keep its largest clients on board.
Boeing's management has messed up the Dreamliner launch several times, mostly due to labor and supplier problems. It has cost shareholders. The firm's stock traded over $100 less than two year ago. It sits just over $43 now. And, if clients squeeze Boeing on payment terms, the shares are bound to go lower.
Douglas A. McIntyre is an editor at 24/7 Wall St.