Tanker Deal, 717 Plane to Wipe Out Boeing Profit

Boeing Co. (BA) on Friday said it plans to end production of the 717 airliner and raised cost estimates for a U.S. Air Force (search) tanker program, resulting in charges of $615 million, likely wiping out fourth-quarter profit.

The moves come as Boeing struggles to regain its spot as the world's leading jet maker, recently lost to European rival Airbus, and seeks to win back a lucrative Air Force tanker contract after a procurement scandal last year.

Boeing shares fell 22 cents to $50.41 on the New York Stock Exchange.

Chicago-based Boeing said the charge would take 48 cents a share off fourth-quarter earnings, expected to be released on Feb. 2. Wall Street expected Boeing to earn 50 cents a share for the quarter, according to Reuters Estimates.

Boeing said it would cost $340 million, or 27 cents a share, to end production of the 717 airliner (search), its single-aisle, 100-seat aircraft, which is mostly used on short haul, high frequency routes.

Boeing said it would end production in 2006, with the costs, including supplier termination expenses, spread through 2005 to 2007.

"The overall market for the airplane does not support continuing 717 production beyond delivering on our current commitments," Boeing commercial airplanes president Alan Mulally said in a statement.

Boeing said the rest of the charges -- $275 million, or 21 cents a share -- are for meeting higher costs of initial production of aerial refueling tankers for the Air Force.

In October, Congress derailed an Air Force plan to lease and buy 100 modified Boeing KC-767 (search) tankers after a former Air Force arms buyer, Darleen Druyun (search), said she improperly steered billions in contracts to Boeing before joining the company in 2003.

The tanker contract is expected to be put up for competition again by the U.S. government. Boeing said the charge reflects costs of the delay and meeting expected supplier obligations.