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<< Previous   of   Next >> The Boeing Co.  (click to enlarge) Three Boeing 787s are shown in the final stages of assembly at the company's plant in Everett.   ADVERTISEMENT   Related Stories • Boeing has 'great confidence' 787 will fly on time 2/6/08 • Boeing confirms new delay in 787's first flight, delivery 1/16/08 • Boeing may again delay Dreamliner's first flight 1/15/08   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Wednesday, December 12, 2007 Boeing said it can meet its revised 787 schedule Despite ongoing challenges, Boeing said Tuesday it can meet its revised Dreamliner production schedule. By Michelle Dunlop Herald Writer EVERETT -- Despite "wrinkles" in its supply chain and significant risks ahead, the Boeing Co. says it's on target to deliver the first 787 Dreamliner jet in late 2008. Boeing officials on Tuesday reconfirmed the plan to deliver 109 of their fast-selling, fuel- efficient Dreamliner jets by the end of 2009. Amid skepticism from industry analysts, the head of Boeing Commercial Airplanes, Scott Carson, stuck to the schedule that Boeing laid out in October, when it announced a six-month delay to the Dreamliner program. "The plan we announced in October for the 787 is unchanged: to fly the first airplane around the end of the first quarter of 2008 and begin deliveries in late November or December time frame, and to deliver 109 airplanes in 2009," Carson said. In his first update call with analysts and media since taking over the 787 program eight weeks ago, Pat Shanahan noted some of the steps he has taken to put the 787 back on track, including holding daily meetings on the 787 assembly floor in Everett. Shanahan already has traveled to Italy and South Carolina to meet with key 787 suppliers. He soon will travel to Kansas and Japan to see face-to-face the remaining Dreamliner partners. Shanahan said he coordinates regularly with those major partners on progress at their factories. Boeing's global partners, who fly major 787 assemblies to Everett, continue to send some incomplete pieces, known as "traveled work." That remains Boeing's biggest challenge on the 787, Shanahan said. However, the amount of traveled work is declining. "We are now managing traveled work much more efficiently," Shanahan said. Back in early summer, Carson said, Boeing didn't understand the extent of incomplete work that was shipped from suppliers. Additionally, Carson added, Boeing thought it had the tools and processes in place in Everett to handle those unfinished pieces from suppliers. Shanahan, he said, has helped iron out those supply chain issues. "We think we have a better grasp on what those challenges are," Carson said. Boeing has set January as the goal to turn the power on in the first Dreamliner. The new jet's maiden flight would be the next major step, taking place by the end of March. While Boeing and its global partners strive toward that milestone, they also need to execute the next key objective: meeting Boeing's aggressive production ramp-up plan. While Boeing puts its mostly carbon fiber composite Dreamliner through flight certification, the company intends to continue building 787 jets in order to turn out 109 Dreamliners by the end of 2009. "There's no doubt our ramp-up is aggressive, but throughout this effort we have not found any fundamental flaws in our production system design that would lead me to believe it's not doable," Shanahan said. Few industry analysts share Shanahan's enthusiasm. And Tuesday's update call didn't seem to answer their concerns. "By in large, the call was pretty uninformative," said analyst Scott Hamilton, with Leeham Co. Boeing has backed itself into an unenviable position with analysts and the media. In September, the company denied that a delay in the 787's first flight would affect the Dreamliner's delivery schedule. Within weeks, however, Boeing officials were forced to announce a six-month setback. The company maintains that by the end of 2009 it will fall only three deliveries short of its original schedule. But Boeing won't have much to show for its efforts until the end of 2008. That's when Boeing should receive flight certification on the 787 and deliver its first Dreamliner to Japan's All Nippon Airways. "I don't think Boeing is going to be able to convince anyone that it's really on track until the end of 2008," Hamilton said. The six-month delay in Boeing's 787 has affected some Dreamliner customers and suppliers. Carson and Shanahan said the company continues negotiations with some suppliers, such as Spirit Aerosystems in Wichita, Kan., on the financial ramifications of that delay. J.P. Morgan analyst Joseph Nadol also noted that the lack of specific future milestones beyond the first flight is a problem for Boeing. "Boeing appears to be making progress toward its near-term milestones leading up to first flight, but the challenges of supplier negotiations, production ramp-up and certification remain daunting," Nadol said in a note to investors. "We still believe that the best course of action might be to de-risk the program by stretching out production." The Dreamliner continues to do well in the marketplace, winning 314 orders so far in 2007 -- a new single-year sales record, Carson said. The 787 has received 762 firm orders from 52 customers over its lifetime. After Tuesday morning's conference call, Boeing's stock continued to decline but dropped even more after the Federal Reserve cut interest rates Tuesday afternoon. Boeing's stock, which traded as high as $107.83 in July, closed the day at $88.70, down $3.94. The Associated Press contributed to this report. Reporter Michelle Dunlop: 425-339-3454 or mdunlop@heraldnet.com.

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