Delay imperils Dreamliner's delivery date

Boeing Co. officials acknowledged for the first time Wednesday that there is an increased risk it won't meet its delivery schedule for its first 787 Dreamliner.

Production glitches have forced the planemaker to postpone the new jet's maiden flight, once slated for late summer, until sometime between mid-November and mid-December, Scott Carson, president and chief executive of Boeing Commercial Airplanes, said on a conference call with analysts and reporters.

That leaves Chicago-based Boeing just six months to gain federal certification for the 787 before the first aircraft is due to be delivered to Japan's All Nippon Airways in May. To compensate, the company plans the most aggressive flight testing for the groundbreaking jet in its history.

Boeing still believes it can deliver the first plane on time. But the delays leave it with little or no buffer to deal with any problems it discovers during its flight tests, said Mike Bair, who leads the 787 program.

"We're eliminating the time that we had to deal with anything unexpected that might come up," Bair said. "That's where there's increased risk."

The setbacks are worse than many analysts had anticipated, and some think a delay to the program is inevitable.

"I'm skeptical they will meet their first delivery date," said Scott Hamilton, a consultant to the airline industry. "Will it slip a few weeks? There's a high likelihood. It's the unknowns that will do them in."

Boeing would likely have to pay a penalty to All Nippon if its first delivery slips into the summer of 2008, as some analysts predict. However, minor delays wouldn't materially affect Boeing's earnings, Carson said.

But the bigger concern to analysts is that the supplier problems that cropped up late in the summer could continue to upset production far down the line. The aerospace giant was forced to shut down its 737 and 747 production lines in 1997 after suppliers couldn't keep pace with Boeing's schedules.

"At the end of the day, it's all about delivering airplanes," said Richard Aboulafia, aerospace analyst with Virginia-based Teal Group. "Entry into service and [production] ramp-up, that's what matters."

The first Dreamliner has been slowed by a global shortage of titanium fasteners and poor work documentation, both complicated by a Boeing decision this year to ship some components out of sequence to its assembly line in Everett, Wash.

The company also is behind schedule in integrating the computers that will run the 787's flight controls, but it expects to complete that task this month, officials said.

"I have to wonder what else is lurking out there," added Hamilton, of Seattle-based Leeham Co.

Boeing is working with its suppliers to speed production of the special fasteners used to meld components of the 787, which uses carbon composites more extensively than any commercial jetliner ever built, Bair said.

And the company also is untangling the mass of red tape created by the thousands of temporary fasteners used to hold the first 787 in place during its July 8 rollout. Also contributing to the bookkeeping nightmare is so-called traveled work, or components that suppliers shipped out of schedule or without wiring and systems in place.

Boeing has to document every piece that goes into or comes out of the airplane so that it can prove to regulators that the final product matches its designs. But since the first aircraft didn't follow the assembly process that Boeing had carefully mapped out, its engineers had generated much of the paperwork by hand rather than relying on an automated system the company had created.

"It jumbled up the way that the airplane got put together," Bair said. "We've spent a lot of time understanding what we're building, how we're building it and making sure the paperwork matches."

To straighten out production kinks, Boeing is retooling its production schedule to give its supply partners, responsible for more than 70 percent of the 787, more time to complete their segments before the components are shipped to Everett to be put together to form an aircraft.

"As we struggled through airplane No. 1, we realized we had to get that traveled work minimized," Bair said.

Even so, Boeing probably won't have the work sequences hammered out until somewhere between its 10th and 20th plane, he said.

The stakes are heightened for Boeing since it has an aggressive delivery schedule: 112 Dreamliners are supposed to roll out of its massive factory by 2009. Now the company faces pressure to produce the new plane at an even faster rate to keep pace with sales, observers say.

So far, Boeing has tallied 706 total orders for the Dreamliner, a record for a new jet, 258 of which were placed this year.

The company plans to have six planes in the air by early January, flying around the clock in an attempt to meet Federal Aviation Administration certification standards.

Boeing will speed up its testing by flying each aircraft for about 120 hours per month, Bair said. That's up from the 70 to 80 hours of monthly flying it employed more than a decade ago when it tested the 777, Boeing's last commercial jet program launch.

jjohnsson@tribune.com


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