Boeing Delays 787…Again

 - April 9, 2008, 10:14 AM

Boeing will delay first flight of the 787, this time by as much as six more months, as it continues to grapple with slower-than-expected completion of work originally meant for suppliers, the company said today. It now expects to fly the first airplane some time during this year’s fourth quarter–at least 14 months later than originally planned. Last scheduled for the end of the second quarter, the delayed first flight will force Boeing to move first delivery to the third quarter of 2009 and cut delivery total to just 25 airplanes next year.

Strained relationships between Boeing and its 787 customers originally scheduled to take deliveries this year will only turn tenser, and less lucrative, as airlines ask for more monetary compensation. The original six-month delay cost Boeing a projected $3.5 billion in 2008 revenue, the company said last October, when it announced a shift in delivery of 35 airplanes from this year to next. Now, instead of delivering 109 airplanes in 2009, it plans to ship even fewer than the 35 that migrated from the 2008 schedule.

While research and development costs will likely increase as a result of the 787 schedule change, Boeing said it expects no change to this year’s earnings guidance. The company said it continues to expect “strong” earnings-per-share growth next year and will provide 2009 financial guidance when it holds its first-quarter 2008 earnings conference call later this month.

Today 787 program head Pat Shanahan reported that the delays have forced Boeing to change the timing of the introduction of two 787 derivatives. Plans now call for the 787-9, a larger variant of the baseline airplane, to enter service in early 2012. The 787-3, a shorter-range model previously scheduled to deliver in 2010, will now become the second derivative of the airplane family and likely not see service until 2013.

The company said in January it would reassess its supply chain and production system capabilities to determine the details of the 787’s flight-test program and initial delivery profile. As a result of that assessment, a more gradual ramp up to full-rate production than previously planned will follow the first-year delivery plan announced today, said Boeing.  

Meanwhile, Shanahan has turned his attention to more immediate concerns. “The work that remains to be done on Airplane Number One is well defined, and we can see our way to–and have confidence in–the new milestones we have set for it,” he said. “We have addressed the major challenges that slowed our progress while trying to complete the primary structure–the parts shortages, engineering changes and manufacturing changes–and we are well into the systems installation that is the precursor to putting power on the airplane for the first time.”

Shanahan outlined a series of milestones Boeing expects to reach before June 30, including moving the 787 static and fatigue structural test airplanes to their testing location, starting final assembly of the third and fourth airplanes, completing hardware airworthiness qualifications and achieving power-on of the first airplane.