Boeing Dreamliner Delays Spelling Trouble

After six delays and nearly a decade of an­tic­i­pation, Boeing says its 787 Dreamliner will finally make its first flight by the end of the year and that deliveries of the next-generation airliner will begin in late 2010. Sounds good, but Wall Street's not buying it. In a scathing downgrade, Morgan Stanley analyst Heidi Wood cast serious doubt on Boeing's ability to achieve either goal, citing concerns that the 787 won't get airborne until 2010, and that Boeing won't start delivering any of the 840 planes on order until spring 2011. In a conference call last week announcing a $1.6 billion third-quarter loss, Boeing CEO Jim McNerney concluded, "We know we can and must do better on our development programs."

First planned for a summer 2007 launch, the 787 should've been generating profits by now. Instead it's siphoning cash and overlapping with the redesign of the 747-8 jumbo jet, delaying both. The problem stems from Boeing's attempt to reinvent the wheel. Not only is the 787 a giant leap in technology (it's made from a lightweight carbon composite rather than aluminum), it's also the test case for a whole new way of building airplanes. Boeing outsourced much of the engineering and design, with the idea that entire sections of the 787 would arrive prebuilt, so that final assembly would take only three days. But small problems caused big delays, and in a year when Boeing has cut 7,200 jobs, the lack of oversight has hurt, says aviation analyst Richard Aboulafia. Boeing has made healthy profits from defense contracts. But with the Pentagon cutting big weapons systems, Boeing needs the 787 more than ever.