Dreamliner delay is wake-up call for Boeing

Boeing’s humiliating confession Wednesday that its 787 Dreamliner will be six months late for initial deliveries underscores the intense pressure the company faces in getting its revolutionary new passenger jet in the air.

The stakes have rarely been higher for Boeing, which has pushed the envelope many times in its 91-year history. The 787 is a $10 billion gamble to reinforce the company’s standing as the world’s most innovative and successful builder of commercial airplanes.

While Boeing officials are being praised for “biting the bullet,” industry insiders say the delivery delay chips away at Boeing’s credibility and dampens the company’s efforts to overcome European rival Airbus Industrie for preeminence in the global aerospace industry. Boeing’s integrity already took a hit a few years ago when it decided against developing a super-jumbo jet to counter Airbus’ double-decker A380.

But Airbus, which plans to deliver its first A380 to Singapore Airlines on Monday, also has had its share of production problems and delays. The A380 — the world's biggest passenger jet — is nearly two years behind schedule because of improperly installed wiring.

Now the tide has turned against Boeing. The first 787 won't be delivered until November or December 2008 instead of May. And the airplane won’t fly until March at the earliest, at least six months behind schedule.

Slide show   Boeing rolls out 787 Thousands of Boeing workers and airline executives mark the introduction of the firm’s innovative Dreamliner passenger jet. more photos

“The real danger to Boeing now is what happens going forward,’’ said aerospace analyst Scott Hamilton, managing director of Seattle-based Leeham Co. “It’s the unknowns that can prove to be the killer.”

The persistent production delays, parts shortages and supplier snafus that have eroded the  program’s margin for error could end up hindering the crucial program to win certification needed to put the plane in commercial service.

“Until the first production plane rolls out the factory door, it’s hazardous to say all is well,’’ Hamilton wrote in a special report Wednesday. He noted that the flight test program could still turn up something unexpected that would result in costly and time-consuming rework. “There are still a million things that could go wrong between now and first delivery.”

Last month Boeing postponed the first test flight to mid-November or mid-December because of assembly problems and difficulty with flight-control software. That would have left the company just five to six months before the scheduled first delivery, or about half the time it took to test the 777 a decade ago.

Boeing hopes that by restructuring the 787 program and pushing back the first flight even further, it will be able to detect and deal with the “unknowns.”

“They are giving themselves a respectable margin this time,’’ said Richard Aboulafia, vice president for analysis at Teal Group, a Fairfax, Va.-based aerospace research company. “It’s better to get it good than get it on time.”

The bad news, however, is that Boeing added no margin for its extremely aggressive production schedule, Aboulafia said. Boeing still plans to deliver 109 Dreamliners by the end of 2009, a reduction of only three from its original plans.

So far it looks like Boeing can get by with just a bruised corporate ego and its credibility still intact. But all that could change with further hiccups. So far the company's stock is down only about 9 percent from its recent peak of just over $106 this month.

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