Boeing delay 787 programme again

[vgp]

Boeing expected to delay 787 programme again
Reuters | Tuesday, 08 April 2008


Boeing has said it would update investors on the progress of its 787 Dreamliner on Thursday (NZT), likely heralding a widely anticipated further six- to nine-month delay for the troubled programme.


Such a setback would be the third major change to the original schedule and put first delivery of the lightweight, fuel-efficient aircraft as much as 18 months behind the original target.

Problems with a shortage of parts, redesigned components and a widespread supplier base have bedeviled Boeing since it started major assembly on the first 787 last May.

The mid-sized, widebody plane -- which has not yet left the ground for tests -- was originally scheduled for first delivery next month.

Wall Street analysts and industry experts now expect first delivery, to Japan's All Nippon Airways, as late as September 2009.

The long delay will likely cost Boeing millions of dollars in compensation payments to airlines, and is an embarrassing loss of face for the US plane maker shortly after arch-rival Airbus suffered a two-year delay bringing its A380 superjumbo to market.

The long-expected update will be the first new information from Boeing on the programme since late January. It is a chance for the company to explain the lack of progress on the plane and reset delivery targets that Wall Street lost confidence in months ago.

"Bad information drives out the good," said Richard Aboulafia, aerospace consultant at Teal Group. "As long as Boeing has a completely untenable (delivery) number out there, it casts suspicion over any other information provided."

Boeing is still officially sticking to its target of delivering 109 787s by the end of 2009. Given the delays, analysts now expect only 10 to 45 of the planes to be delivered in that time.

The company has been reassessing the 787 programme for the past few months, and was expected to announce a new delivery schedule either early this month or on April 23, when Boeing reports first-quarter earnings.

The expected delay would come on top of two previous major setbacks announced in October and January, which have already put the project nine months behind schedule.


www.stuff.co.nz/4470125a34.html

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Boeing Investors May Lose Patience With 787 Delays (Update4)

April 8 (Bloomberg) -- Boeing Co. may need to give itself plenty of leeway when disclosing the new 787 Dreamliner delivery schedule tomorrow, because a third miscalculation might jeopardize the second-largest planemaker's standing with investors.

``The more they miss, the more I get the impression they don't even know what the problems are,'' said Jon Kutler, head of Admiralty Partners Inc., a Los Angeles-based investment firm that focuses on closely held aerospace companies. ``It's going to take a whole lot to repair their credibility.''

Boeing has lost 26 percent of its market value since the first of two previous delays was announced in October. Comments last month by International Lease Finance Corp., the biggest 787 customer, primed investors to expect a six-month delay into next-year's third quarter, and analysts said the stock may fall further if Boeing strays much from that consensus tomorrow.

The shares will drop if a delay is longer, and if it's shorter, ``I don't think anyone will believe them,'' said Myles Walton, an Oppenheimer & Co. analyst in Boston who rates Boeing ``market perform.'' The stock is ``kind of treading water.''

Boeing shares dropped 2.7 percent on Oct. 10, the day of the first postponement, and 4.7 percent, the most in four years, after the Wall Street Journal reported the imminent second delay on Jan. 15. Boeing rose 4 cents to $75.02 at 4 p.m. in New York Stock Exchange trading.

Times Report

Boeing will probably announce an 18-month delay, from the original plan to start delivering Dreamliners next month, the Times of London reported today, citing unidentified people close to Boeing. That would push shipments back to the end of 2009, rather than the ``early 2009'' guidance Boeing gave in January. The company may also scrap the 787-3 version so engineers can focus on solving the problems, the newspaper said on its Web site.

``What we are looking for is for Boeing to give us a feel for whether they have their arms around the issue,'' said Manind Govil, portfolio manager at RS Investments in New York, which owns more than 1 million Boeing shares. ``What is the new schedule, how realistic is the new schedule, and what is the magnitude of the problems?''

Lori Gunter, a spokeswoman for Boeing in Seattle, said, ``We have a program update on Wednesday, and that's all I can say.''

Boeing is counting on the 787 to help reclaim the title of world's largest commercial aircraft maker, which it lost in 2003 to European rival Airbus SAS. With rising oil prices, the light materials that reduce fuel consumption have helped make the 787 Boeing's most successful new-plane sales campaign ever.

Customer's Prediction

Ten analysts in a Bloomberg News survey agreed with last month's prediction by Steven Udvar-Hazy, chairman of International Lease Finance Corp. and the 787's biggest customer, that deliveries will now slip into next year's third quarter.

``These guys had two predictions before and they've blown both of them,'' said Cai von Rumohr, an analyst with Cowen & Co. in New York with an ``outperform'' rating on Boeing. ``This time they'll want to reset the schedule once so they can hit it.''

The delays have mounted in part because so much is new with the 787, from the wide use of lightweight composite materials instead of aluminum to a manufacturing process that relies on vendors to build large sections of the plane that Boeing later assembles. A center wing box that attaches wings to the plane had to be strengthened, and the company ran short of fasteners.

Success a `Curse'

``The enormous sales success of the program may have been more a curse than a blessing, as it locked Boeing into the schedule that ultimately could not be executed,'' Joseph Nadol, a New York-based JPMorgan analyst, wrote March 25.

Some investors say the Dreamliner will be worth the wait.

``The real issue is whether the plane works and is a commercial success in the end,'' said Colin Glinsman, who oversees about $25 billion in assets as chief investment officer at Oppenheimer Capital in New York and says Boeing was among the top five holdings in his accounts at the end of the last reporting period. He declined to say how many shares it owns now.

``It's a great plane, there's no real competition from Airbus for many years, and it's potentially a home run for Boeing,'' Glinsman said.

With more than 850 Dreamliners on order even before the first delivery, the model may match a mark it took the 777 more than 10 years to reach, JB Groh, an analyst with D.A. Davidson & Co. in Lake Oswego, Oregon, said in an April 4 note.

More problems are likely to pop up once the company starts test flights, George Shapiro, an analyst with Citigroup in New York, wrote March 26.

``People just want to get a timetable that they feel is realistic,'' said Michael Derchin, an analyst with FTN Midwest Research Securities Corp. in New York. ``This needs to be the last delay.
www.bloomberg.com/apps/news?pid=20601213&sid=ax0V0CMa2jjg&refer=home

[flyjoe180]

One can't help thinking the 787 programme is starting to become Boeing's A380 with regard to delays and setbacks. They say the technology using carbon fibre and other composites along with the GeNX engine is proposed as the ultimate fuel saving combination. The truth I believe is that the GeNX is the heart of these savings. If Airbus are allowed to use that engine on their A350, Boeing have a real problem on their hands. Carbon fibre and increased electrical systems aside.

[vgp]

Boeing's 787 Delayed Again

Citing continued production delays, Boeing(BA - Cramer's Take - Stockpickr) slashed the number of expected 787 deliveries next year to about 25, down from its most recent projection of 109.

The airplane maker said Wednesday that first delivery will take place in the third quarter of 2009, while the initial flight is scheduled for the fourth quarter of 2008. At one time, the debut flight was scheduled for August 2007.

Wednesday's schedule revision follows an assessment, started in January, of supply chain and production systems. The new plan includes a more gradual ramp-up to full production. By 2012, the production rate for the aircraft -- Boeing has 892 orders -- is expected to reach 10 a month.

On a conference call Wednesday, Scott Carson, CEO of Boeing Commercial Airplanes, declined to specify when Boeing will catch up with its delivery schedule or how it will deal with penalty provisions for late deliveries. Discussions with customers are ongoing, he said.

"We are extremely disappointed," said launch customer All Nippon Airways. The Japanese carrier was scheduled to take the first 787 in mid-2008. "This is the third delay in the delivery of the first aircraft, and we still have no details about the full delivery schedule," ANA said. "We would urge Boeing to provide us with a 120% definitive schedule as soon as possible."

The delay reflects slower-than-expected completion of work that traveled from supplier facilities into Boeing's final assembly line in Everett, Wash., unanticipated rework, and the addition of margin into the testing schedule, the company said.

"We have been very concerned about the amount of traveled work," said Carson, adding that Boeing is now committed to a stronger presence at many of its partners and has assigned "senior people" to the task. Boeing had designed a unique process to build the 787, relying on partners to manufacture components at locations around the world, then ship them to Everett.

Boeing moved last month to acquire 50% of one partner, South Carolina contractor Global Aeronautica, which is involved in fuselage assembly and had not hit milestones laid out in January. Another problem, disclosed Wednesday, involves the need to strengthen the center wing box, which holds the wings in place. It is being manufactured in Nagoya, Japan.

Boeing executives expressed confidence they could meet the new schedule, but they previously did the same in announcing earlier delays. "There are no technical inventions needed here," said Pat Shanahan, manager of the 787 program. "It's a matter of burning through the work."

Production timing for the 787's derivatives has also been altered. Now, the first delivery of the 787-9, a larger version of the airplane, is planned for early 2012. It will be followed by the 787-3, a shorter-range model, which had been planned for 2010.



Despite increased research and development costs associated with the new schedule, Boeing said it expects no change in its 2008 earnings guidance and anticipates strong 2009 earnings per share growth. It promised forecasts during the company's earning conference call April 23rd.

The possibility of added delays had already been expected by some analysts, and indeed shareholders took the news in stride. Shares of Boeing were recently up 4.6% at $78.50.

www.thestreet.com/s/boeings-787-delayed-again/newsanalysis/business-news-update/10411279.html?puc=googlen&cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA

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All Nippon May Have to Revise Fleet-Expansion Plan on 787 Delay

By Chris Cooper and Edmond Lococo

April 10 (Bloomberg) -- All Nippon Airways Co., the first customer of Boeing Co.'s 787 Dreamliner, may have to revise its recently announced fleet expansion plans after the planemaker delayed the short-range version of the aircraft until at least 2012.

Tokyo-based All Nippon and Japan Airlines Corp. were the only customers for the 787-3 that the carriers planned to use on domestic routes. The plane had been slated for 2010 delivery.

Boeing yesterday delayed the 787 for the third time in six months, pushing back the first shipment to the third quarter of 2009, at least 14 months behind schedule. It also postponed the introduction of two derivatives: the 787-9, a larger variant, and the 787-3. The short-range plane now won't be introduced until some point after the 787-9's 2012 delivery, Boeing said, without giving a specific date.

``All Nippon will have to completely review their new fleet plans,'' Osuke Itazaki, an analyst Credit Suisse Group in Tokyo, said in an interview yesterday. ``It will affect them on several levels, not just income.''

All Nippon had ordered the 787s to replace its Boeing 767- 300s. The 787s are 20 percent more fuel efficient than the older aircraft, according to Boeing. All Nippon, also known as ANA, ordered 30 of Boeing's 787-3s and 20 of its 787-8s.

``We still have no details about the full delivery schedule,'' All Nippon spokesman Rob Henderson said yesterday. ``We would urge Boeing to provide us with a 120 percent definitive schedule as soon as possible.''

All Nippon fell 1.2 percent in Tokyo yesterday to 422 yen.

`Timing Call'

Japan Air hasn't been informed of a new delivery schedule and so can't calculate the effect on its business plan, the airline said in a statement yesterday. ``We are asking Boeing for a new schedule to work out the effect on our plans,'' the statement said.

Boeing has no firm timeframe for when it will announce the schedule for the 787-3, Lori Gunter, a spokeswoman for Boeing, said in an interview.

``We will discuss that in great detail directly with those customers,'' Gunter said. ``It's important to have discussions with them before a public announcement. That's the order we'll do things.''

There are talks scheduled with the Japanese carriers, Gunter said, declining to provide the dates.

The 787-3's deferral is ``really a timing call on supporting the number of deliveries,'' Pat Shanahan, the plane's program manager, said on a conference call today. Demand for that version makes up less than 5 percent of the total order book.

Fuel Prices

Boeing plans to develop weight improvements for the 787-9 that will be used to make the short-haul version lighter, Boeing Commercial Aircraft President Scott Carson said on the call. The company still intends to build both derivatives, he said.

The 787-3 was designed to carry more passengers than the 787-8 and 787-9, making it attractive on Japan's high-volume routes, such as Tokyo to Sapporo.

All Nippon predicted an annual cost savings of 10 billion yen ($98 million) and increased revenue when it announced its plan to buy 50 Dreamliners in 2004. Fuel prices have more than tripled since then.

The airline had planned to speed up retirement of older aircraft and said in January that it would introduce 26 Boeing 787s by the end of March 2012.

www.bloomberg.com/apps/news?pid=20601080&sid=aRT_UCdYeu8w&refer=asia

[flyjoe180]

Boeing is suggesting the Boeing 767-300ER as a stop gap measure while the 787 programme is put back on track. It appears that although Airbus is increasing A330 production, that will not be enough to fulfill the worldwide demand for widebody passenger jets. Boeing would achieve production of the B767-300ER by redirecting it's defunct 767 based KC-X programme to passenger jets.

www.flightglobal.com/articles/2008/04/14/222972/boeing-suggests-767-300ers-to-help-solve-the-787-capacity-gap.html

[beagle]

reading on "A-Net" someone has suggested leasing some stored 757's which would put some smiles on some 40 Sqn pilots about to get out.
A comment about ANZ heirachy going straight to Boeing about bring forward the 77-300's and even some LR's or we go to see Mr Airbus is a good idea. I can see Airbus PR doing some visits to 787 customers at the moment with some pretty good deals.

[flyjoe180]

I though the 777 would be a better deal from Boeing, or are they offering the 767 because demand for the 777 is too high for production to handle? All round it's a bad series of events on the part of Boeing. I think airlines might hold out for the B787, but they may, as Beagle alluded to, go Airbus in the meantime and punish Boeing with compensation claims as happened to Airbus with the delayed A380.