The Boeing Co. plans to stretch out its new Dreamliner in response to customer demand for a 300-plus-seat version.

Boeing has not formally launched the larger version, but at this point, “it’s not a matter of if, it’s a matter of when,” Boeing 787 program chief Mike Bair said Monday.

The decision means Boeing’s new 787-10 would compete head-to-head with the company’s own 777 jets, but analyst Richard Aboulafia called that “necessary and inevitable.”

“It means you’re going after your own 777-200ER market, but it beats letting the other guy take it,” said Aboulafia, with the Teal Group in Virginia.

Bair gave a progress report on 787 development Monday, saying that the new airplane’s development remains generally on schedule. Sales are stronger than expected, he said, and the company is studying ways to increase the pace of production so it can deliver more planes sooner to eager airlines.

“We had some thoughts that things would slow down a bit on the sales front, but if anything, it’s becoming more frenetic,” Bair said.

Boeing has 298 firm orders for the 787, from 28 customers, Bair said. Another 30 airlines are considering proposals for another 500 planes in all.

One potential customer is Emirates, the Middle Eastern airline that has been one of the most vocal in calling for Boeing to build a further-stretched version of the 787.

“That’s the conversation we’ve had with them from Day One,” Bair said. Boeing initially proposed a 210-seat 787-8 and a 260-seat 787-9, but Emirates said it wanted a 300-seat version.

Airbus has proposed a 300-seat version of its 787 competitor, the A350, but Boeing has been reluctant to follow because it already has 300-seat jets – the strong-selling 777-200 and 777-200ER.

Initially, only Emirates was interested in the 787-10 version, Bair said, but interest has spread. There are now about a dozen potential customers for the larger plane, and that has caused Boeing to study the new plane “much more seriously.”

Boeing is “still finalizing exactly how big it’s going to be,” he said. But the company estimates it will be able to bring the 787-10 to market around 2012.

It will be a “phenomenal machine,” Bair said.

It’s a smart move on Boeing’s part, Aboulafia said. Emirates is owned by the government of the United Arab Emirates, just like Dubai Ports World, the company involved in the recent port management flap in Congress. After that “debacle,” Emirates “probably could use a little hand-holding,” the analyst said.

The new 787-10 would fly farther and be cheaper to operate than Boeing’s original 777-200s, and will be attractive to all the airlines who fly them now, he said.

The plane will be “superb” on North Atlantic routes, and also for flights in and out of the Middle East, Aboulafia said. British Airways and Germany’s Lufthansa are among the airlines that have shown interest in the 787-10, he said. “Those are potentially big customers.”

Boeing has essentially sold all of the 787s it can build through 2011, Bair said. Given that, the company and its suppliers are studying whether they can increase its production rates.

The issue, Bair said, is whether it makes sense financially for all the companies to invest in the extra equipment they’d need to build more planes. For Boeing, that could mean another assembly line in Everett, he said.

“We’re in the middle of deciding what we think that ultimate rate is to be at,” he said. The company should decide on that this summer.

Reporter Bryan Corliss: 425-339-3454 or corliss@heraldnet.com.