Boeing Confirms Fourth 787 Delay

posted: 09 April 2008 ET

: Boeing has announced a fourth delay to the 787 program, which will push it back another six months and increase the total program delay to at least 18 months. One of the many customers for the 787 is Bahrain's national carrier Gulf Air, which ordered 16 Dreamliners and acquired purchase rights for eight additional 787s. This artist's rendering depicts a Gulf Air 787 flying over Manama, Bahrain's capital city. Credit: Boeing Photo

Boeing has announced a further six-month delay to the 787 Dreamliner program, confirming intense recent speculation among analysts that the company was about to reveal a fourth schedule slippage.

First flight of the 787 will move into the fourth quarter of this year rather than the end of the second quarter, and the first delivery of a 787 to a customer is now planned for the third quarter of 2009 instead of the first quarter, the target Boeing had set in January when it delayed the 787 first-flight and test schedule for the third time.

"While significant progress has been made assembling Airplane Number 1, first flight is being rescheduled due to slower than expected completion of work that traveled from supplier facilities into Boeing's final assembly line, unanticipated rework, and the addition of margin into the testing schedule," the company said in a statement.

The "unanticipated rework" is probably a reference to Boeing's need to redesign parts of the 787's center wing box. Steven Udvar-Hazy, the chairman of key 787 customer International Lease Finance Corporation, revealed Boeing's unanticipated design problems with this fundamentally important piece of the aircraft's structure at a recent conference in New York.

Originally, before Boeing realized the scale of its supply-chain and production problems with the all-new 787, it had planned for the aircraft to make its first flight in the third quarter of 2007 and to deliver the first Dreamliner to a customer in May 2008.

But today's announcement means the 787 program has slipped by a year and a half compared with Boeing's original plan — almost as long as Airbus was forced to delay its first deliveries of A380 superjumbos after the company encountered major wiring-installation problems during completion of the first few aircraft for customers.

Reducing the risk of further delays

Boeing says its latest decision to delay 787 flight-testing will provide additional margin in the 787 production and testing schedule that will reduce the risk of further delays to the program.

However, the new delay also greatly affects Boeing's initial delivery schedule for the 787. Earlier, the company had planned to deliver more than 100 Dreamliners in 2009. The new, more conservative delivery schedule that Boeing has developed with its 787 production partners targets approximately 25 deliveries in 2009.

Despite the new setbacks, and the important financial-penalty consequences that will result (some analysts have estimated Boeing's financial liability to customers for the increasing delays to their 787 deliveries at more than $3 billion), Boeing officials expressed confidence in the new plan and the steps being taken to accelerate program performance.

"Over the past few months, we have taken strong actions to confront and overcome start-up issues on the program, and we have made solid progress," said Scott Carson, Boeing Commercial Airplanes president and CEO. "Nevertheless, the traveled work situation and some unanticipated rework have prevented us from hitting the milestones we laid out in January."

"Our revised schedule is built upon an achievable, high-confidence plan for getting us to our power-on and first-flight milestones," added Carson. "Also, while the fundamental technologies and design of the 787 remain sound, we have inserted some additional schedule margin for dealing with other issues we may uncover in testing prior to first flight and in the flight test program."

Slower ramp-up to full production

The company said in January it would conduct a comprehensive assessment of 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, the first-year delivery plan announced today will be followed by a more gradual ramp up to full-rate production than previously planned.

"We deeply regret the disruption and disappointment these changes will cause for our customers, and we will work closely with each of them to minimize the impact," said Carson. "We have taken significant action to improve supply chain and production system performance, such as our investment in Global Aeronautica, but based on our assessment, the prudent course is to proceed with a more gradual ramp up to full-rate production."

"The work that remains to be done on Airplane number 1 is well defined, and we can see our way to — and have confidence in — the new milestones we have set for it," said Pat Shanahan, 787 vice president and program manager.

"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," said Shanahan.

"We have also worked closely with our partners to achieve higher levels of completion of their parts of subsequent airplanes, and we will continue to drive improvements in the supply chain and production system performance," he said.

To illustrate the progress the 787 program has made, Shanahan outlined a series of milestones that will occur before June 30: 787 static and fatigue structural test airplanes will move to their testing locations; Airplanes 3 and 4 will enter final assembly; hardware airworthiness qualifications will be complete; and power-on of the first aircraft will be achieved.

Shanahan also said the program has changed the timing of the introduction of two 787 derivatives. The 787-9, a larger variant of the airplane, will be the first derivative of the baseline 787 with delivery planned for early 2012. The 787-3, a shorter-range model previously slated to deliver in 2010 to All Nippon Airways, will now become the second derivative of the airplane family.

While research and development costs will likely increase as a result of the 787 schedule change, Boeing expects no change to 2008 earnings guidance. The company continues to expect strong earnings per share growth in 2009 and says the outlook for its defense business and in-production commercial airplane programs remains strong.