Long-Term Impact On Program Unclear

Is another delay looming for Boeing's 787 Dreamliner? Several analysts predict the planemaker may need to push off its development schedule for the composite-bodied aircraft once more... and the stock market has responded, by driving down Boeing share prices.

Are those concerns completely justified, though? While he believes Boeing's target of delivering 109 Dreamliners by the end of 2009 is a tad optimistic, Credit Suisse analyst Rob Spingarn says investors may be overreacting. "[W]e think the 787 would need an incremental delay of a year or more to justify the latest sell-off," he told The Associated Press.

As ANN reported, Boeing announced a six-month delay in its ambitious 787 program in October. First flight is now targeted for sometime before the end of the first quarter of 2008, with the first delivery to All Nippon Airways later this year.

To meet those goals, Boeing has doubled-up its efforts to get the first aircraft flying... but those efforts still might not be enough, Morgan Stanley analyst Heidi Wood said. In a research note to investors this week, Wood predicted power-up of the first Dreamliner won't happen until late-February, about a month later than Boeing is shooting for... which, in turn, would move off the 787's first flight to sometime in late April or May.

Boeing spokeswoman Yvonne Leach wouldn't confirm if Boeing still plans to power-up the first Dreamliner by the end of this month. The first aircraft -- which started in assembly last May, was rolled out to the public in July... and since then has been torn down and reassembled with proper fasteners -- is now in the final production bay, she said.

"We're definitely focused on our milestones for Airplane No. 1. Our goal is to get her out flying," Leach said.

Boeing has "largely resolved" issues that led to the original delay, Leach added, including a shortage of the specialized fasteners used to connect the composite barrel sections of the 787 fuselage. But niggling problems remain with a few suppliers, she said.

"What we're finding is that the job completion rates at the partners are not at the pace we'd like," she said, adding the problem isn't tied to any one supplier.

Banc of America Securities analyst Robert Stallard says even if Boeing announces an additional three-week delay, it "should not cause too much concern: certainly in the decades-long life of the program it would prove to be an irrelevance."

Many feel short-term issues aren't as important in the grand scheme of things, as the prospect that Boeing won't be able to meet its ambitious delivery goals. In other words, analysts aren't as concerned with delays to early milestones... so long as later goals are accomplished with a minimum of angst.

"It's an aggressive production ramp-up schedule that does not leave a lot of room for problems that may occur and also allow time to fix those problems," said Peter Jacobs, an analyst with Ragen MacKenzie, a division of Wells Fargo Investments.

"They don't want to make the same mistakes and be thrown into the same category as Airbus when it comes to messing up the product development of a new airplane," Jacobs said, referencing the Boeing competitor's difficulties in bringing the A380 superjumbo to market.

FMI: www.boeing.com, www.credit-suisse.com, www.bankofamerica.com, www.wellsfargo.com/ragen_mackenzie/about/