By Jon Ostrower
In a rare public dustup between two of the biggest collaborators in the aerospace industry, a major supplier to Boeing Co. said the world's largest plane maker was behind on tens of millions dollars in payments due at the end of last month.
"Boeing is delinquent and Boeing has contributed to some of our underperformance here this quarter in cash flow, which is disappointing, but we're working that with them," said Kelly Ortberg, chief executive of Rockwell Collins Inc., during a call discussing the company's third-quarter results Monday.
Rockwell's chief financial officer, Patrick Allen, said Boeing owes the aerospace electronics company $30 million to $40 million that was due in the quarter ended June 30.
A Boeing spokeswoman said in a statement that the aerospace giant is "in the process of adjusting the payment terms of suppliers." Boeing is changing the frequency with which it pays its bills to suppliers to align with what it describes as industry norms.
The spokeswoman said the company "adheres to all signed contracts with its suppliers."
Boeing has long had the reputation among suppliers as having the most efficient and timely payment, according to industry officials. And Boeing's cash flow is among the most important metrics watched by analysts and investors.
"That's abnormal to history," said Mr. Ortberg. "I hope it's just a blip."
Rockwell supplies Boeing with cockpit displays and other electronics, and the relationship between Boeing, the world's biggest plane maker, and Rockwell, a major supplier, is widely held up as a model for cost-reduction collaboration by both companies.
As part of that collaboration, Rockwell has steadily increased the amount of electronics it supplies on all of Boeing's latest jetliners and some fighter jets in exchange for bulk discounts for the parts it supplies to the plane maker.
Boeing historically has paid its contracts at a 30-day frequency. Boeing declines to say what changes it is making to its payment terms, but industry officials say it is adjusting to 60, 90 or even 120 days, with many of its suppliers.
"It's not really a contractual issue. It's just they haven't paid us," said Mr. Allen.
Rockwell as part of its quarterly results lowered its cash flow and revenue projection for the year, anticipating $5.3 billion in revenue and $750 million in cash flow from operations for the full year. That compared to its earlier $5.3 billion to 5.4 billion and $750 million to $800 million guidance, respectively, driven primarily by weakening business jet production.
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