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<< Previous   of   Next >>   ADVERTISEMENT   Related Stories • Boeing's first quarter income up 38 percent 4/23/08 • Wild Sky Wilderness poised to finally become reality 4/10/08 • Where the wind comes sweepin' down the plain 4/10/08   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Thursday, April 10, 2008 New Boeing 787 schedule leaves some wiggle room By Michelle Dunlop, Herald Writer EVERETT -- It's going to be a jam-packed fourth quarter for the Boeing Co. after it once again delayed its 787 jet Wednesday, pushing the Dreamliner's first flight to late this year. Persistent production issues spurred Boeing to delay the first delivery of its fuel- efficient Dreamliner by nearly 18 months from the original plan to the third quarter of 2009. The widely anticipated delay marks Boeing's third major delivery setback, testing investor confidence and prompting talk of penalty payments to disappointed customers. "Maybe the third time is the charm," said Paul Nisbet, an analyst with JSA Research. While Nisbet found "no compelling reason" to believe Boeing will meet its new schedule, he noted that Wall Street seemed to find Boeing's Wednesday update believable enough. Boeing's shares shot up 5 percent in trading and closed up $3.58 at $78.60. The company's stock has plummeted since late summer, shortly after Boeing rolled out its 787 jet in Everett. Boeing said research and development costs will probably increase because of the latest delay but it expects no change to 2008 earnings estimates. It said it will disclose more financial details when it reports first-quarter earnings on April 23. Boeing originally planned to deliver its first 787s next month and deliver 112 Dreamliner jets by the end of 2009. Industry observers largely regarded the company's plan as overly aggressive. Scott Carson, president of Boeing Commercial Airplanes, introduced on Wednesday a more conservative schedule for its much-delayed Dreamliner. "We deliberately decided to add some margin room," Carson said. The company may need that margin as it heads into the latter part of the year. As Boeing engineers and machinists rush to put the 787 into flight in the last three months of the year, they'll need to deliver the company's first 777 Freighter and continue work on the new 747-8 Freighter, due in late 2009. And the unions representing both Boeing engineers and Boeing Machinists will be busy negotiating new three-year contracts, putting the fear of a strike in customers' and investors' hearts. The unions wasted no time Wednesday in calling for Boeing to drop the global supply chain it relies on to build major sections of 787. The labor groups say Boeing should transition outsourced work on the Dreamliner back to the unions. "Employees are performing heroic efforts to get the 787 back on track and they are getting no help from corporate leaders in Chicago who consistently ignore the truth coming from employees in engineering offices and the factory floor," said Ray Goforth, executive director of the Society of Professional Engineering Employees in Aerospace. Carson acknowledged that the company has increased its engineering presence at partner sites, particularly in Japan, as Boeing worked through design changes to the 787's wing box. Those changes, however, caused further assembly delays on the first aircraft, which is being pieced together in Everett. When announcing its first major setback last fall, Boeing pointed to shortages of fasteners and an unexpected level of incomplete work coming from partners as reason for the delay. Pat Shanahan, who was named 787 program vice president after the initial six-month delay, said those original troubles are smoothing out. Sections of the third 787 jet are about 75 percent more complete than sections shipped for the original Dreamliner, Shan­ahan said. Boeing has conducted thousands of structural tests on the 787's main material -- carbon fiber composites -- with about 95 percent of the test results meeting Boeing's estimates. On the systems side, Shanahan said that nearly 98 percent of the 7 million lines of code needed to run the jet's systems have been written. 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. And Boeing customers seem to still believe in the 787 despite dragged-out schedule changes. Analysts like Nisbet don't expect airlines to cancel any of the almost 900 Dreamliner orders. Northwest Airlines Corp. is scheduled to be the first 787 customer in North America. "We are disappointed by the delay, but we still believe the 787 will be a game-changing airplane for our fleet," spokesman Dean Breest said. Carriers, like launch customer All Nippon Airways, are likely to see compensation. A spokesman for the airline, which is based in Japan, said the carrier was "extremely disappointed" with the latest delay but won't be able to assess the delay's effect on route planning until Boeing provides a definitive delivery schedule. Dreamliner customers irked by delays don't have many options when shopping for a new medium-sized plane that will cut fuel consumption. Boeing rival Airbus won't introduce its mostly composite material widebody jet, the A350 XWB, until 2013 and it already has more than 300 orders in hand. Boeing's Carson said the company hopes to increase its production schedule to 10 787 jets monthly by 2012. It's a plan that JSA's Nisbet actually regards as slightly too conservative, saying he still expects Boeing to deliver 144 Dreamliner jets in 2012. In order to meet any of those goals, Boeing needs to start its 787 flight test program, which could reveal unknown issues. To do that, and keep its other jet programs on track, Boeing will have to hope labor negotiations go well this fall. "All of us on the team realize we must prove our ability to execute this plane," Carson said. The Associated Press contributed to this report. Cast your vote on when Boeing will deliver its 787 by visiting reporter Michelle Dunlop's Aerospace blog at heraldnet.com. She can be reached at 425-339-3454 or mdunlop@heraldnet.com.

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