Everett, Wash. Published: Wednesday, April 9, 2008
Boeing delays 787 at least six months
Company to deliver 25 Dreamliners in 2009
Herald staff and Associated Press
EVERETT – Plagued by supply chain and assembly issues, the Boeing Co. has delayed its 787 jet and scaled back the Dreamliner’s delivery schedule.
“We deliberately decided to add some margin room,” said Scott Carson, president of Boeing Commercial Airplanes, during the Wednesday morning update.
Analysts previously had questioned the scarcity of wiggle room in Boeing’s initial schedule – a plan that included first delivery in May 2008 and the delivery of 112 Dreamliner jets by the end of 2009. Under its new schedule released today, Boeing will hand over the first 787 in the third quarter of 2009 and deliver a total of 25 Dreamliners next year.
Boeing’s stock, which has plummeted since the first major delay was made public last October, rose 4.77 percent Wednesday to close at $78.60. The latest 787 setback, though widely expected, wasn’t worse than investors feared.
Boeing’s Carson said the delay won’t impact the company’s 2008 earnings. Boeing will provide an updated 2009 estimate later this month.
With nearly 900 orders on the books and a total delay of roughly 18 months, Boeing likely will face late penalties from airline customers. All Nippon Airways spokesman Rob Henderson said the carrier was “extremely disappointed” with the latest delay. The launch customer originally expected its first 787 next month. Henderson said that until Boeing provides a definitive schedule it cannot assess the impact on its route planning.
Analyst Cai von Rumohr of Cowen and Co. said it’s unclear whether the program’s schedule is likely to slip again until Boeing provides more details.
“We continue to believe that the critical milestone for determining whether all the bad news is on the table is apt to be a week or two after first flight,” he said in a note to investors.
The analyst said Boeing could face extra costs exceeding $4 billion because of the delays and late penalties to the airlines. Last month, Boeing stepped in and alleviated some of the financial burden of troubled supplier Vought Aircraft, buying out Vought’s shares in a South Carolina 787 factory.
Suppliers from around the world build major sections of the 787 and ship those to Everett where the plane goes through final assembly. Carson noted an increased Boeing presence at supplier factories to assist with any engineering changes – such as a recent redesign of the 787’s wing box – and keep things on track.
“We’re moving forward with commitment and confidence with this airplane,” Carson said.
The union representing Boeing’s engineers and technical workers said Boeing’s latest 787 is reason to bring back Dreamliner work. The engineers’ union heads into contract negotiations with the company this fall.
“Boeing outsourced everything it could to lower costs and it’s hurting this program and the company,” said Ray Goforth, executive director of the Society of Professional Engineering Employees in Aerospace, in a statement.
SPEEA called the 787 the latest example of Boeing’s failed business model, one that transfers knowledge of U.S. engineers to companies across the globe.
Boeing’s vice president of the 787 program, Pat Shanahan, who was appointed last October, listed new milestones to mark the company’s progress.
He said Boeing will power up the first aircraft by the end of June and also begin final assembly of the third and fourth 787s. It also revised the scheduling of the different 787 models, saying the larger 787-9 now will follow the original 787, with first delivery planned for 2012, while the shorter-range 787-3 that originally was pegged for a 2010 delivery will be pushed back behind the 787-9.
“The fundamental technology developed for the 787 is sound,” Shanahan said.
