EVERETT — The Boeing Co. calmed anxious investors’ nerves Thursday, saying its delayed 787 Dreamliner will make its first flight by year’s end.
The company expects to begin implementing a fix for a structural flaw, revealed in June, within weeks, clearing the way for the first flight. Boeing said it plans to deliver the first 787 in the fourth quarter of 2010, more than 2½ years late.
Boeing’s shares skyrocketed on the news, increasing 8.4 percent, or $4 per share, to close at $51.82 Thursday.
“This new schedule provides us the time needed to complete the remaining work necessary to put the 787’s game-changing capability in the hands of our customers,” said Jim McNerney, Boeing’s chief executive.
The company revealed Thursday that it will not seek to sell the first three flight-test 787 aircraft because of an “inordinate” amount of rework on those planes. Instead, Boeing will take a $2.5 billion, or $2.21 per share, charge in the third quarter. Still, Boeing reiterated that its 787 program remains profitable, despite numerous delays and cost overruns.
In mid-June, Boeing put its plans to put the first Dreamliner in flight later that month on hold. Tests revealed a structural weakness where the 787’s wing and body meet. The company plans to install four to five fittings on the 787’s stringers, which run along the jet’s wings and center wing box, Pat Shanahan, Boeing’s general manager of airplane programs, said on Thursday.
Although Shanahan considers the fix a “straightforward” modification, he said the company’s pace in implementing the repair is limited by the confined space where the problem occurs. Boeing workers in Everett will install simultaneously the fix on both the first flight test aircraft and an aircraft designated for testing only. Overall, workers here will incorporate the fix on the first 15 Dreamliners while Boeing partners will take care of the remaining planes.
In determining the Dreamliner’s new schedule, Boeing gave itself additional time between the first flight and the first delivery compared to previous schedules, said Scott Carson, president of Boeing Commercial Airplanes. The company also adjusted its timeline for meeting a production goal of 10 787s monthly to 2013 from 2012. Boeing’s 787 has won 850 orders, despite 73 cancellations.
In order to meet its production target, Boeing will need to add a second production line. On Wednesday, the company filed for permits to expand its recently acquired Charleston, S.C. facility. But Carson said that was a “hedging move,” allowing the company to explore its options, which include Everett and Charleston.
Boeing will consider the availability of trained workers and the cost of doing business at each site, Carson said. The company also will keep in mind which site will aid Boeing best in meeting its new schedule.
“We’re going to make the decision on the second line late this year,” he said.
Boeing officials acknowledged investors’ and customers’ skepticism about its ability to stick to the revised schedule, having delayed the 787 on five previous occasions. Boeing’s Shanahan said the company’s test pilots have been gaining greater confidence with the test planes during taxiing and testing exercises conducted during the delay. And Boeing has added more buffer into the 787’s schedule.
Also “there is less uncertainty about the performance of the systems,” Shanahan said.
But not everyone shares Boeing’s enthusiasm.
Fitch Ratings said Thursday that Boeing’s newest schedule for production of the fuel-efficient 787 jet is a negative factor for credit ratings. Fitch said Boeing had doubled the levels of its debt during the past six months and that its credit measurements were weak for the company’s “A-plus” rating. But Fitch didn’t cut the rating because of solid performance in the rest of Boeing’s business.
Troy Lahr, an analyst at Stifel Nicolaus &Co., said the new schedule is “achievable,” but that the program has lost credibility.
“We’re not holding our breath,” he said.
787 update
The new schedule for Boeing’s 787:
The Dreamliner will make its first flight by the end of this year.
Delivery of the first 787-8 is set for sometime during the last three months of next year.
Boeing vows to hit its target production rate of 10 jets monthly in 2013.
The first three flight test aircraft will not be sold, forcing Boeing to take a $2.5 billion charge on those planes against its third quarter earnings for 2009.
The Associated Press contributed to this story.
