Boeing tries to stem 787 doubts

EVERETT — On Wednesday, the Boeing Co. put to rest rumors about its 787 jet.

Yes, the Dreamliner’s first flight has been pushed back to mid-November or mid-December. And, no, the Boeing Co. doesn’t expect to delay the first 787 delivery to Japan’s All Nippon Airways next May.

“Right now we don’t see this translating into delays,” said Mike Bair, vice president of Boeing’s 787 program. “The most important thing is to deliver the airplane on time.”

Despite lingering doubts among analysts, Bair’s and Boeing’s answers sufficiently satisfied investors. The company’s stock dipped only slightly Wednesday, down 8 cents to close at $95.84.

Paul Nisbet, an analyst with JSA Research in Rhode Island, pointed to Boeing’s stock as an indication that the news of a flight delay neither surprised nor upset investors.

However, he said, should additional delays crop up, Boeing’s stock may take a beating. That’s a situation to which Boeing’s rival Airbus can attest. The European planemaker pushed back deliveries of its A380 superjumbo jet by an average of two years due to problems with the plane’s wiring. “Airbus has lost billions on the A380,” Nisbet said.

So far, wiring isn’t the culprit in the Dreamliner’s delay, Boeing officials say.

The cause of Boeing’s delay is two-fold, said Scott Carson, president of Boeing Commercial Airplanes. The company is dealing with systems integration issues as well as problems finishing up incomplete assemblies shipped by suppliers.

For the 787, Boeing is relying on a chain of global partners to provide major sections fully “stuffed” with wiring and ready to be snapped together in Everett. The company previously had announced that many of the assemblies for the first 787 arrived without wiring and systems installed. On Wednesday, however, Boeing’s Bair elaborated on the issues created by having those unfinished pieces “travel” to Everett.

Due to a worldwide shortage of fasteners, suppliers were forced to install temporary ones before shipping the assemblies to Boeing. Workers in Everett got stuck trying to sort out the permanent from the temporary fasteners. The documentation from suppliers hasn’t always matched the problem, Bair said.

On the first airplane, Boeing still needs to install about 700 permanent fasteners. Bair disputed reports that the composite structure of the 787 has been damaged in replacing the temporary fasteners with permanent ones.

Bair also downplayed accounts that Boeing’s rush to roll out its first 787 on July 8 contributed to the delay, saying the extent of the fastner shortage wasn’t anticipated.

To correct the problem with subassemblies, Boeing is pressing its suppliers to ship completed sections for future 787s. The aerospace company gave its partners the green light to ship components for the fatigue test plane because that plane requires no installed systems for testing. In doing so, Bair said, Boeing has freed up time for suppliers to finish fully their assemblies for the second airplane.

“What we’re dealing with on airplane one is not an indication of what (the suppliers) are capable of,” Bair said. “I’ve got great confidence of how the follow-on airplanes are going to be.”

Boeing also is working with supplier Honeywell on software coding an issue that’s hindering systems integration on the Dreamliner.

The Chicago-based planemaker now anticipates flying the first 787 sometime between the middle of November to the middle of December. Originally, Boeing had hoped to have the Dreamliner in the air by late August. Last month, Boeing’s chief executive Jim McNerney had said the flight might not happen until October.

The first flight is crucial in that it triggers Boeing’s flight test program in which it proves to the Federal Aviation Administration the Dreamliner is safe to fly commercially. Boeing needs FAA certification before it delivers the first 787 next May. The company already had a shortened flight program compared to previous plane programs. It had 11 months for the 777, which included certifying three engine manufacturers.

With the delay, Boeing will have five to six months to flight test the 787.

“What we’re really doing is eating into the buffer,” Bair said.

Boeing intends to add in one 787 to flight test every few weeks until it has its first four test planes equipped with Rolls-Royce engines in the air an event Bair expects to see by the first part of 2008. Two more test airplanes with GE engines also will be added into the mix. Then the company will run flight tests essentially around the clock to log in the necessary hours and complete required testing.

Condensing the already narrow flight test window doesn’t leave Boeing much room, if any, to deal with problems that could pop up. That’s what has analyst Scott Hamilton, with Leeham Co., worried.

“I’m skeptical because there are just so many things that could go wrong,” Hamilton said.

How Boeing handles the “unknowns” will be key to whether the Dreamliner is delivered on time. However, even Boeing’s Carson suggested a slide in the delivery schedule of one to three months wouldn’t create significant troubles.

“It would have minimal financial impact for us in 2008,” he said.

Also on Wednesday, Boeing announced it had finalized an order from Russia’s Aeroflot for 22 Dreamliners. The $3.6 billion deal pushed the 787 over the 700 order mark. The previously publicized order was contingent on Aeroflot shareholder approval, which was granted Tuesday.

Boeing has received 258 orders for its Dreamliner this year. Since its launch, the 787 has picked up 706 orders from 48 airlines.

Reporter Michelle Dunlop: 425-339-3454 or mdunlop@heraldnet.com.

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