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Wed 21 Sep 2011 10:01 AM

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Qatar Dreamliner delay blamed in Boeing-Cargolux spat

Cargolux dispute over jet may be tied to Boeing’s late delivery of 787 to Qatar

Qatar Dreamliner delay blamed in Boeing-Cargolux spat
The dispute will further push back the debut of the Boeing 747-8 freighter jet, which has seen a two-year, $20.4bn delay

Boeing Co has scrambled to iron out contract problems that
forced it to postpone
the first delivery of a stretched model of its iconic 747
jumbo jet, driving down its shares.

The US planemaker was due to deliver the first freighter
version of its significantly revamped 747-8 to Luxembourg-based freight carrier
Cargolux on Monday.

But in an embarrassing setback, it was forced to scratch a
lavish three-day celebration, including a surprise musical act, after receiving
a letter from the European carrier on Friday.

Both sides blamed "contract issues" for the delay,
rather than the technical problems that pushed the program back about two
years. A performance problem could have cast greater doubt over subsequent

"We had a party planned for today," Randy Tinseth,
vice president of marketing at Boeing Commercial Airplanes, told a conference
in Barcelona.

"We have some contract issues which need to be resolved
and we are working on that," he told the ISTAT aircraft finance

Cargolux, which has ordered 13 of the 747-8F jets worth
$319m each at list price, threatened to look for other aircraft if the dispute
could not be resolved.

"In the event that the issues cannot be resolved in a
timely manner, Cargolux will source alternative capacity to fully meet customer
demand and expectations ahead of the traditional high season," it said in
a statement.

The delivery delay came a day after the head of Qatar
Airways took a board seat at Cargolux following the Gulf airline's decision to
take a stake of just over a third
in the Luxembourg-based freight carrier.

Aircraft analyst Scott Hamilton said the Cargolux delivery
had become embroiled in a wider dispute between Qatar Airways and Boeing over
late-delivery penalties for the 787 Dreamliner, Boeing's latest carbon-composite
passenger jet.

Qatar Airways chief executive Akbar Al-Baker regards the
penalty for delayed 747-8 deliveries as a benchmark for other future penalties,
including on the 787 Dreamliner, the analyst said.

Akbar Al Baker, the CEO of Qatar Airways which has 30 787s
on order and an option for 30 more, said he would consider cancelling the order
if there were further delays in delivery.

Boeing plans another lavish ceremony September 26-28 for the
first delivery of the revolutionary lightweight 787 passenger plane to Japanese
customer All Nippon Airways.

The Cargolux delivery was due to be followed by other
deliveries to airlines or freight carriers, culminating in a 467-seat passenger
version later in the year.

"This is an embarrassing mishap, but it is a short-term
hiccup, of many that have occurred," said Alex Hamilton, managing director
with EarlyBirdCapital.

"The plane will be delivered, as we anticipate the 787
will be. What really matters ... will be the production ramps of those two
aircraft," he said.

Boeing plans to deliver a combined total of 25-30 747-8 and
787 aircraft this year, a majority of which would be 747-8s.

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