Video: Boeing delays Dreamliner shipments

msnbc.com news services
updated 10/10/2007 2:53:52 PM ET 2007-10-10T18:53:52

Boeing Co. is delaying initial deliveries of the 787 Dreamliner by six months until late next year due to continued challenges in completing assembly of the first airplanes, the company said Wednesday.

The delay is an embarrassing setback for Boeing, which has for months insisted it would meet its delivery timetable, and mirrors delays suffered by rival Airbus on its A380 superjumbo.

Boeing said deliveries that had been scheduled to begin next May will be pushed back to late November or December 2008. The first flight, already pushed back once from the initial target of earlier this fall, now is anticipated around the end of the first quarter of next year.

The delay highlights inherent problems in building new airplanes and could slow the momentum Boeing built up after years of lagging behind European rival Airbus in commercial airplane manufacturing.

The 787, Boeing’s first all-new 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, more durable and less prone to corrosion than aluminum.

But the company’s effort has been shadowed by difficulty getting the right parts from its suppliers on time, among other issues, and is facing a global shortage of fasteners that hold large sections of the plane together.

Boeing, which has orders for more than 700 of the 787 planes from 48 airlines and leasing companies, said the delay would not affect earnings and it kept its financial forecast for this year and next unchanged.

“We are disappointed over the schedule changes that we are announcing today,” said Chairman and CEO Jim McNerney. “Notwithstanding the challenges that we are experiencing in bringing forward this game-changing product, we remain confident in the design of the 787, and in the fundamental innovation and technologies that underpin it.”

McNerney had publicly voiced confidence as recently as four weeks ago that the airplane maker would be able to deliver the first 787 on time next May to Japan’s All Nippon Airways Co., despite skepticism among industry observers following the first postponement.

On Sept. 5, Boeing formally pushed back the first test flight to mid-November or mid-December due to complications with final assembly and finalizing flight-control software. That would have left the company just five to six months before the first delivery, or about half the time it took to test the 777 a decade ago.

The company first acknowledged problems meeting the original test-flight schedule in August when it cited ongoing challenges with out-of-sequence production work, including parts shortages, and remaining software and systems integration activities.

Airbus still hasn’t recovered from its own problems introducing a new aircraft: the A380. Two years of delays, due largely to wiring problems, wiped billions of dollars off its parent company’s profit forecasts for the coming years and sent many orders to Boeing.

The announcement Wednesday isn’t likely to cause such turmoil for a highly anticipated plane that is sold out through late 2013. Airbus’ planned A350 mid-sized widebody aircraft isn’t due to hit the market before 2013.

But analysts cautioned another delay would be more troubling.

“Just because the delivery date has been changed, customers are not going to be canceling,” said Morningstar analyst Brian Nelson. “It’s not as difficult to build as the A380. ... If things extend beyond the six-month delay and we start getting closer to a year, then I start getting worried.”

The delay won’t affect the aerospace company’s ratings, said Craig Fraser of Fitch Ratings.

“If we see further delays or there are some problems with the first flight, or the ramp-up in production after the initial deliveries, that could affect the positive outlook that we have on the company,” he said.

All Nippon Airways issued a statement expressing its disappointment.

“We regret that delivery of the 787 will be delayed and we hope to keep the impact of the delay to a minimum,” spokesman Damion Martin said. Asked if the carrier would be pursuing penalties against Boeing for the late deliveries, he said it was “difficult to say” immediately.

Boeing shares, which had moved higher before the late-morning announcement, quickly tumbled in afternoon trading Wednesday.

© 2013 msnbc.com

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