Boeing to delay first delivery of 787 Dreamliner
NEW YORK (Reuters) - Boeing Co (BA.N) on Wednesday pushed back first deliveries of its 787 Dreamliner by at least six months as it struggles to assemble the new lightweight, carbon-composite plane.
The delay is an embarrassing setback for Boeing, which has for months insisted it would meet its delivery timetable despite production problems, and mirrors delays suffered by rival Airbus (EAD.PA) on its A380 superjumbo.
"We are disappointed by today's schedule changes and deeply regret the impact these delays will have on our customers," said Boeing Chief Executive Jim McNerney, on a conference call.
Boeing, which has orders for more than 700 of the 787 planes from 48 airlines and leasing companies -- worth more than $100 billion at list prices -- said there would be no "material" impact to earnings and left its forecasts for this year and next unchanged.
The Chicago-based company said 787 deliveries are now slated to begin in late November or December 2008 versus an original target of May 2008.
Chief Financial Officer James Bell said some revenues would slip from 2008 to 2009 as about 30-35 plane deliveries are moved from one year to the next. The company is set to update its financial forecasts alongside its third-quarter earnings report on October 24.
The company said it is still aiming to deliver 109 787s by the end of 2009, only three fewer than originally planned.
Boeing shares closed down $2.77 or 2.7 percent, at $98.68 on the New York Stock Exchange. Shares of key suppliers like Spirit Aerosystems Holdings Inc (SPR.N) and Rockwell Collins Inc (COL.N) also fell.
The delay is a blow to Japan's All Nippon Airways Co (9202.T), the first 787 customer, which was hoping to ferry passengers to next summer's Beijing Olympic Games in the initial planes of its planned 50-strong 787 fleet.
"Many outside Boeing had questioned the feasibility of meeting the first delivery date," Bank of America analyst Robert Stallard said in a note. "Boeing has now bitten the bullet and accepted that the schedule is beyond them. The firm has taken the only sensible move under the circumstances."
FIRST FLIGHT ALSO PUT BACK
Boeing said the delay was due to problems putting together the actual structure of the plane, compounded by the scarcity of some parts.
It said that integrating the plane's flight control software, being produced by Honeywell International Inc (HON.N) -- which had contributed to a previous delay in the schedule -- was not the cause of the delivery delay.
The company said it now expects the first test flight of the 787 to take place "around the end of the first quarter" next year, suggesting it could be as late as March or even April 2008.
That is a drastic extension to its original plan to start airborne tests in August 2007. In early September, Boeing rescheduled the first test flight for mid-November to mid-December as it wrestled with software problems and a shortage of bolts.
Boeing said the new schedule restores some margin to deal with unexpected problems that might appear during ground and flight tests. If Boeing sticks to its new schedule, it could have eight months to complete flight testing and certification, as opposed to six months on its previous estimate.
Flight testing and certification on Boeing's last new airliner, the 777, took 11 months.
"We deeply regret the impact these delays will have on our customers, and we are committed to working with them to minimize any disruption to their plans," Scott Carson, chief executive of Boeing's commercial airplanes unit, said in a statement.
He said the main problems were installing parts of the plane's structure, which had been thrown out of sequence by some suppliers sending incomplete work to Boeing's main Everett, Washington plant, aggravated by a shortage of some small parts.
Boeing, which rolled out a shell of the first 787 model in front of many of its customers in early July, did not say whether it would have to pay any penalties or other compensation to airlines buying the plane, which is standard in the industry when a plane's delivery is delayed.
(Reporting by Bill Rigby)
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