Latest 787 delay may cause a backlash

Published 5:38 pm Wednesday, June 24, 2009

EVERETT — Just days after promising at the Paris Air Show that their new 787 jet would fly by June 30, Boeing Co. executives found themselves in an all too familiar situation: announcing another Dreamliner delay.

Citing a structural issue, Boeing postponed the first flight of its 787 Dreamliner jet on Tuesday, making it essentially certain the company will miss its first delivery set for early next year. This is the fifth delay of Boeing’s fast-selling, mostly composite Dreamliner, which already is nearly two years behind schedule.

Despite calling the structural issue both “manageable” and “limited” Boeing couldn’t provide a new schedule for its 787, keeping both suppliers and customers guessing.

“While this development is a disappointment, the limited and localized structural reinforcement we expect to make is quite manageable,” said Scott Carson, president of Boeing Commercial Airplanes. “We are already working toward a solution and we are also focused on continuing our progress on other aspects of the 787 development program.”

Wall Street, however, did not share Boeing’s confidence that this fifth delay is minor. Boeing shares plummeted $3.03, closing down nearly 6.5 percent at $43.87 on Tuesday.

During tests last month, Boeing identified a structural problem in the area where the 787’s wings meet its fuselage. Although preliminary tests indicated that first flight could take place this month as planned, recent tests on the full-scale plane detected the need to reinforce the side. At the air show early last week, Boeing had assured investors and customers the Dreamliner would take flight by the end of June. But the company decided late in the week that the first flight would be postponed. The show was still going on at that point, but Boeing made no further announcements.

“We see nothing about what led us to the discovery as particularly concerning about the larger test program,” said Scott Fancher, general manager of the 787 program. “I expect to be able to share a new schedule … in the next several weeks.”

There are about 18 sections, 1 to 2 square inches in size, along each 787 wing that need reinforcement, Fancher said. The area contains multiple materials — composites, titanium and aluminum.

“I want to be very clear here, this is a structural reinforcement issue, not an issue with materials or workmanship,” said Pat Shanahan, vice president for airplane programs at Boeing, on Tuesday. “Composites are the right choice for airplane structure.”

Besides relying more heavily on composites for the 787 than it had for previous jets, Boeing also is depending more on its global partners. Two of its Japanese partners, Fuji and Mitsubishi Heavy Industries, are involved in determining a solution to the 787’s latest problem.

Boeing officials said it is common to detect problems like this during testing. Although Boeing decided to postpone the first flight, Fancher believes the airplane would have been fine had it flown.

“We have seen nothing about the issue we are dealing with here that would indicate further increased risk in other portions of the aircraft,” Fancher said.

Boeing will continue its pre-flight tests on the first 787 as its engineers decide how to fix the structural issue. Still, the first 787 delivery, which was expected by the end of March 2010, also will be affected. Boeing already had an aggressive flight test program planned in order to meet that first delivery.

“There will be some impact” (to delivery), Carson said.

Dreamliner launch customer All Nippon Airways expressed frustration over the fifth delay of the 787. ANA originally expected to receive its first Dreamliner in May 2008. The airline urged Boeing to provide a new schedule quickly.

“We are disappointed that the first flight of the 787 will be postponed, and urge Boeing to specify the schedule for the program as a whole as quickly as possible,” said ANA in a statement.

Analysts like Scott Hamilton, with Issaquah-based Leeham Co., estimate the delay could be as long as two to three months.

“Boeing was counting on the 787 to transform the company, and not only just for its own sake but also to be the pattern for future airplanes,” Hamilton said. “So it’s huge for the company.”

In recent months, 787 customers have grown increasingly restless. Boeing has logged 58 order cancellations for the Dreamliner this year.

During last week’s Paris Air Show, Qatar Airways’ chief executive Akbar Al Baker made threats through the media that the airline could cancel its order for 787 if more problems arose.

“Boeing doesn’t realize how much they’re hurting their customers’ plans,” he said. “They’re very much mistaken if they think we’re going to give them much more time on the issue.”

The coming weeks will tell whether time has run out on Boeing and some of its 787 customers.

“We remain very confident that the 787 will be a wonderful product for our customers,” Carson said.

The Associated Press contributed to this report.

When will Boeing’s 787 finally take flight? Visit The Herald’s Aerospace blog to have your say.

What Boeing said about previous 787 delays:

September 2007: “We don’t see a high probability — or even a low probability — of (the first flight) moving out of the year.” — Mike Bair, then vice president of Boeing’s 787 program.

October 2007: “While we’ve made some progress … the pace of that progress has not been sufficient” to meet the May 2008 delivery date.” — Jim McNerney, Boeing’s chief executive.

January 2008: “The fundamental design and technologies of the 787 remain sound. However, we continue to be challenged by start-up issues in our factory and in our extended global supply chain.” — Scott Carson, president of Boeing Commercial Airplanes.

April 2008: “We deliberately decided to add some margin room” to the revised schedule. — Carson said, in announcing a six-month delay that put first delivery in the third quarter of 2009.

December 2008: “We will overcome this set of circumstances as we have others in the past, and we understand clearly what needs to be done moving forward.” — Pat Shanahan, vice president of Airplane Programs at Boeing.