Richard Aboulafia, an analyst at aerospace research firm Teal Group.
PRODUCTION DELAY LOOMS
More important is the effect on Boeing's production rate, which is scheduled to jump to 10 a month by the end of this year, from five now.
That jump is crucial to Boeing's plans to eventually make a profit on the 787. Most of the investment in a new plane occurs early in the program, which means earlier planes cost more to build than later ones.
The quicker Boeing can refine the process and ramp up numbers of planes produced, the quicker it will reach the target of 1,100 planes, where it calculates it will break even on the program. At planned production rates that would take about a decade.
If Boeing makes fewer planes than it has budgeted for and is not getting cash in the door for deliveries, that could add up to more than $1 billion per month in "incremental working capital spend," according to Solomon at Moody's.
With $6 billion of cash on its balance sheet at the end of the third quarter, Boeing looks strong enough to deal with that, but the longer it goes on, the more the worries mount, said Solomon.
"If a billion to a billion and a half of incremental working capital consumption is the right number in terms of cash burn every month, you start getting into three, six months out and it has a bigger impact," he said. "My guess is that they would have to potentially cut the production rate if that were the case."
Cutting production of 787s, or halting it altogether, would be a huge blow for a plane program that is already three years behind schedule.
"The market really only cares about one thing right now and that is, will production change?" said Leake at BB&T. "I believe it will not, Boeing can't afford to do that. It's too expensive to ramp down and ramp up again."
Production delays would ripple down the supply chain, could cost jobs and could even mean the loss of future orders if airlines lose patience with Boeing.
Rubel at Jefferies said this is unlikely, but in the