Boeing Co. pushed back its oft-delayed 787 jetliner by another six months Wednesday, postponing the jet's debut in commercial service until the third quarter of 2009, further jolting the company's credibility and likely costing it billions of dollars in additional costs and penalties.
The latest delays - the third revision to its delivery schedule and fourth switch in the plans for first test flight - underscore the problems Boeing is having keeping to a schedule while leaning heavily for the first time on outside contractors to do most of the manufacturing work. The aircraft touted for its potential to be more fuel-efficient than other large jets is now more than a year behind the original schedule.
The inaugural test flight now isn't expected to take place until the fourth quarter as Boeing builds more time into the schedule to reduce the risk of further delays. The company had initially planned to begin test flights last August or September and deliver the first plane to Japan's All Nippon Airways this May - a delivery it had recently rescheduled to early 2009.
Investors showed relief that the long-rumored delay had finally been announced, driving up shares in the company by $3.58, or 4.8 percent, to close at $78.60 following a sharp decline in recent weeks.
But customers are increasingly uneasy about the ongoing setbacks. All Nippon Airways spokesman Rob Henderson said the carrier was "extremely disappointed" with the latest delay. He said that until Boeing provides a definitive schedule it cannot assess the impact on its route planning.
The more than 50 airlines that have placed 892 orders for the top-selling plane will be entitled to hefty compensation for the delays, and Boeing's reputation for reliability also is at stake. The company can ill afford any more program glitches or reneging on schedule commitments if it intends to maintain the momentum the 787 has helped it seize from rival Airbus.
"I think there's an awful lot riding on this," said Richard Aboulafia, an analyst with the aerospace consulting firm Teal Group. "It's one of those three-strikes-and-you're-out scenarios from the standpoint of management, from the standpoint of a lot of people who are needed to keep the faith."
No customer has yet to cancel an order for the new jet, but the backlog is valued at a whopping $151 billion.
The 787, Boeing's first newly designed jet since airlines started flying the 777 in 1995, will be the world's first large commercial airplane made mostly of carbon-fiber composites, which are lighter and more durable than aluminum and don't corrode like metals. Boeing says it will be cheaper to maintain and offer greater fuel efficiency and more passenger comforts than comparable planes flying today.
But the unprecedented plan to assemble a jet from components manufactured largely by other companies has run into multiple snags involving outsourcing problems involving contractors in numerous countries.
The company blamed the newest delay in part on slower-than-expected progress on work that suppliers didn't complete, which Boeing has had to do on the final assembly line, and on engineering changes that had to be made on the plane's center wing box.
Engineers recently discovered that the center wing box, which connects the plane's wings to the fuselage and holds fuel, needed to be stiffened. That required the addition of hundreds more clips and fasteners, said Pat Shanahan, vice president and general manager of the 787 program.
Shanahan said he's confident Boeing will hit its new targets because the new schedule has enough wiggle room built into it and because there's a lower risk of time-consuming surprises in the remaining work on the first airplane.
"There are no technical inventions needed here. It's a matter of burning through the work," he said on a conference call.
Boeing now anticipates delivering a total of 25 of the new airplanes in 2009, down from the originally planned 112.
Boeing announced the new production schedule while reporting quarterly earnings that exceeded Wall Street estimates.
Production cost overruns, penalty payments will offset near-term financial gains
Bair moved out amid project delays
Boeing Schedules 787 Dreamliner First Flight for Second Quarter 2009; First Delivery for First Quarter 2010
Schedule change driven by impact of Machinists' strike and fastener replacement work.