Boeing supplier dispute has halted 777 freighter production for two months, sources say

By Dan Catchpole

SEATTLE, Oct 23 (Reuters) - Boeing's BA.N dispute with a small Florida-based supplier has halted production of its 777 freighter for nearly two months and disrupted output of the 767, including freighters and KC-46 aerial refueling tankers, according to Boeing workers and court filings.

Boeing filed a complaint in August alleging supplier Vaero had stopped delivering a critical wing component known as the trailing-edge rib kit, stalling work at the Everett, Washington, wing-production facility that supports the 777 freighter and 767 programs, according to a copy of the complaint reviewed by Reuters. The disruption was costing Boeing as much as $6.5 million a day, the complaint said.

Boeing said in the complaint that the trailing-edge rib kit was an "indispensable" part and Vaero was the sole supplier.

Although the companies reached a settlement in late September, production of the 777 freighter has yet to resume, according to three Boeing workers familiar with the matter. They declined to be named because they were not authorized to speak publicly.

The dispute also disrupted production of the 767, a widebody cargo and military aircraft, the people said. Since the settlement, Boeing has received some parts for the 767 line, according to one of the workers.

The prolonged disruption highlights the fragility of aerospace supply chains, showing how a dispute involving a single supplier can halt production of aircraft that remain in strong demand.

The lawsuit was first reported by Law.com in August, but the nearly two-month production disruption has not previously been reported.

Boeing declined to comment. Vaero did not respond to requests for comment.

BRINGING PRODUCTION IN-HOUSE

Boeing is trying to bring production of the trailing-edge rib kit in-house, according to two of the people. The component is used in wing assembly for the 767 and current-generation 777 freighter. Boeing's 777X, which uses composite wings, has not been affected.

Without the Vaero parts, Boeing removed two partially assembled 777 freighters from its final assembly line, according to one Boeing worker.

Using data from aviation consultancy IBA, Reuters identified one of the aircraft as destined for FedEx FDX.N.

FedEx did not respond to a request for comment.

Boeing has delivered 21 777 freighters so far this year, company data show. It also has a handful of freighters whose wings were assembled before the dispute and could still be delivered before year-end, according to two of the Boeing workers.