Boeing warns it will take $2.05B hit

Two Boeing 787 test planes pass at Boeing Field in Seattle in October 2010. The company built six test versions of the Dreamliner. It has decided it won’t refurbish and sell the last two.

Boeing Co. warned shareholders it will take a $2.05 billion earnings hit when it announces financial results next week, in part because the planemaker has decided it won’t refurbish and sell its last two 787 test jets.

The accounting charges also involve the 747-8 air-cargo and KC-46 aerial tanker programs.

The company announced the balance sheet maneuvering after the U.S. stock market closed Thursday. Its shares fell more than 1 percent to about $132 in after-hours trading.

“These are the right, proactive decisions to strengthen our business going forward,” Boeing CEO Dennis Muilenburg said in a written statement.

Boeing had planned to sell the two seven-year-old 787 Dreamliners after refurbishing and modifying them for commercial use. Scuttling that plan will result in a charge of $847 million, or $1.33 per share. The costs are being written off as research and development expenses.

Boeing built six of the test Dreamliner planes. The first three were donated after Boeing determined they would have no commercial value because of the way they were modified. One was sold.

The company said the remaining two were made in 2009. Since then, they “have been used extensively for flight and ground testing, with both airplanes achieving more than 6,700 flight and ground-testing hours combined,” according to the statement.

“Our investment in 787 flight test airplanes paved the way for the growing Dreamliner fleet today and helped refine improvements for other platforms,” Muilenburg said.

Boeing has not determined what it will do with the airplanes, spokesman Chaz Bikers said.

The jets were made at the company’s commercial aircraft manufacturing hub in Everett, Wash. The aerospace giant also assembles the 787 in North Charleston, where the first South Carolina-made Dreamliner rolled out of the hangar in April 2012.

Locally, Boeing employs about 8,000 workers.

The company, which celebrated its 100th anniversary on July 15, releases its second-quarter earnings Wednesday. For that same period a year ago, Boeing reported a $1.11 billion profit.

In addition to the Dreamliner decision, the company plans to take an $814 million charge for its 747-8 as it nixes plans to double production of the big cargo jet to one a month in 2019.

“On the 747 program, we continue to monitor the air cargo market and aggressively drive productivity and cost reduction as we work to win additional orders to support ongoing production,” Muilenburg said.

Boeing also expects to book a $393 million loss from the KC-46, a delayed aerial refueling tanker it is building for the U.S. Air Force. That reflects higher costs associated with previously announced schedule and technical challenges, the company said.

Finance chief Greg Smith called the accounting charges “prudent actions that reflect market realities, reduce future financial risk and ultimately drive value to our shareholders.”

Contact John McDermott at 843-937-5572.