The Wall Street Journal-20080116-More Delays Plague Boeing-s Dreamliner
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More Delays Plague Boeing's Dreamliner
Boeing Co., already six months behind schedule on its 787 Dreamliner jet program, is close to announcing more delays that might hurt its ability to deliver as many planes as promised in the initial year of production.
The aircraft maker continues to experience problems on a variety of fronts, according to people familiar with the situation. It has had difficulty getting the first plane ready to fly, and now the 787 may not make its first flight until June. Boeing also has made slow progress in overcoming parts shortages and other issues at suppliers' factories. An announcement that would include a new time schedule might come as soon as today.
Further delays would likely make it impossible for Boeing to meet its goal of delivering 109 airplanes by the end of 2009. If that occurs, the company may have to pay millions of dollars in penalties to airlines for missing delivery deadlines.
Production delays must be solved quickly or Boeing risks airlines defecting to a competing airplane being developed by rival Airbus. For now, Airbus, a European Aeronautic Defence & Space Co. unit, is running about four years behind Boeing in bringing its proposed A350 model to market.
To save money, Boeing gave unprecedented control over the development of important parts of the 787 to a wide network of suppliers world-wide. In many cases, those suppliers stumbled, leading to months of parts shortages and technical problems. Since September, Boeing has twice announced delays as the schedule has slipped from the original plan to deliver the first airplane this May. In October, Boeing said first delivery had been pushed back until November or December of this year.
Some customers and analysts have accused Boeing Chairman and Chief Executive Jim McNerney and other Boeing officials of being overly optimistic and too slow to reveal the full scope of the program's troubles. Boeing officials say they have disclosed issues as they came up.
In the weeks since Boeing brought in a new 787 program manager, Pat Shanahan, to straighten out the project, workers have scrambled to get the first airplane ready for test flights. At the same time, Boeing has sent armies of its own employees to help suppliers prepare to turn out as many as seven of the widebody jets each month -- a daunting task, considering that many suppliers have had trouble turning out pieces at even a slow rate.
Mr. Shanahan had hoped that keeping the 787 factory open over the holidays would help make up for lost time, but continuing parts shortages and other technical issues hampered progress. Many important components, including wiring and cockpit instruments, still haven't been installed in the first aircraft, according to people familiar with the situation.
That airplane, originally scheduled to fly last summer, is still weeks from being ready for engineers to power up its electronics. That milestone was expected to occur around the end of January but now appears to have slipped until as late as March. It takes about two to three months of testing from that point for engineers to clear the airplane for its first flight, meaning the plane may not fly until June, roughly nine months later than the original plan.
The new delay makes it unlikely that Boeing will be able to get the 787 certified by the Federal Aviation Administration until early 2009. The first delivery, to Japan's All Nippon Airways Co., would occur after that. A spokesman for All Nippon Airways said he was unaware of new delays. The airline has 50 Dreamliners on order.
John Plueger, president and chief operating officer of aircraft leasing giant International Lease Finance Corp., said the leasing company has been expecting more delays. "I would be surprised if a delay is anything less than three months," he said. ILFC, an American International Group Inc. unit, is the largest Dreamliner customer, with 74 planes on order.
Mr. Plueger said customers would rather endure modest delays than have Boeing rush a problematic airplane. "This airplane is going to be the basis of every airplane Boeing builds in the future, so it needs to be right," he said.
Even with its troubles, the 787 is the hottest-selling new airplane in Boeing's history. Boeing has won orders for 817 Dreamliners from 53 customers. The plane, which features a combination of lightweight materials and fuel-efficient engines, is expected to be 20% cheaper to fly and a third less costly to maintain than older jets.
The delays have taken a toll, however. In late December, Morgan Stanley aerospace analyst Heidi Wood, who had long been bullish on Boeing's stock, downgraded the company after becoming convinced that the program would likely be sidetracked further. Boeing's shares, which had been trading as high as $107 before the first delays were announced, fell 4.7%, or $3.81, to $77.86 yesterday in 4 p.m. New York Stock Exchange composite trading.
