Boeing postpones 787 launch again

updated 9:10 p.m. ET Jan. 16, 2008

Still grappling with shortfalls in its supply chain and slow progress on the assembly line, Boeing Co. ended weeks of speculation Wednesday by announcing the inaugural flight for its new 787 jetliner will be delayed as long as three months, pushing delivery of the first plane into early 2009.

This is the third time the hot-selling airplane has been delayed, an embarrassment that has cast a shadow on the company’s credibility.

“I know our credibility is ... being tested on this program, and it is up to us to deliver on what we say we will do,” Scott Carson, chief executive of Boeing’s Seattle-based commercial airplane division, said in a conference call with analysts.

After a six-month delay announced last October, Boeing had been aiming to start test-flying the new midsize, long-haul plane by the end of March and deliver the first one to Japan’s All Nippon Airways Co. by the end of the year.

The new schedule calls for test flights to begin by late June. The company did not say how soon in 2009 it believes it can start delivering the plane, which has won more than 800 orders so far.

One of the first key milestones for the first plane — turning on its power — has been delayed until early in the second quarter, said Pat Shanahan, general manager of the 787 program. After that, it will take two to three months to run all the ground tests needed before the plane can fly.

Carson said the delay will prevent the company from meeting its ambitious goal of delivering 109 planes by the end of next year. He said the company will spend the next few months analyzing the status of the program before specifying how much it is lowering that target.

Chicago-based Boeing, which builds its commercial jets in the Seattle area, has outsourced an unprecedented amount of the 787’s design and production to manufacturers scattered across the globe. Workers in the company’s widebody assembly plant north of Seattle have had to do a lot of so-called “traveled work” that suppliers were supposed to handle themselves. That problem has become more challenging than others the company has faced, including a shortage of small parts and the tiny fasteners that hold pieces of the plane together.

“We underestimated how long it would take to complete someone else’s work,” Shanahan said. “We designed our factory to be a lean operation. And the tools and the processes, the flow of material, the skill of the personnel are all tailored to perform last-stage high-level integration, check-out and test.

“We thought we could modify that production system and accommodate the traveled work from our suppliers, and we were wrong.”

Boeing has beefed up staffing and dispatched workers to factories throughout its supply chain to get the production problems under control.

Despite the problems, Carson said he remains confident the 787 program is fundamentally sound. “When we have tested the technology and its application to this new family of airplanes, our confidence has only increased,” he said.

Analysts have their doubts.

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