Boeing Co said on Thursday it will take up to $1.1 billion in charges to cover the costs of delayed surveillance aircraft for Australia and Turkey and the previously announced settlement of two US government investigations into its defence unit.
The charges will likely wipe out Boeing's second-quarter profit, which Wall Street had forecast at $967 million, before interest and tax. Boeing shares fell 75 cents, or 0.9 percent, to $81.90 on the New York Stock Exchange.
The planemaker, which is the Pentagon's No 2 defence supplier, had already made public the terms of its government settlement, which has yet to be finalised, but the charge on the surveillance program was more of a surprise to investors.
Problems with Australia's Wedgetail program, as it is known, came to light when Australian Defence Minister Brendan Nelson blasted Boeing on Wednesday for "significant delays" on the $3.5 billion contract to supply six of the early warning aircraft.
Boeing said it will now deliver the planes by the end of 2008, because of an 18-month delay in integrating radar and sensor computer systems. Defence contractor Northrop Grumman Corp is building the radar system for the planes. The schedule for delivery of four of the planes to Turkey, where the program is known as Peace Eagle, has yet to be worked out, Boeing said.
The company said it would take $300 million to $500 million of pretax charges for delays to the two airborne surveillance programs overall, disclosing the exact amount when it issues its second-quarter financial results on July 26.
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