After 3 years, Boeing Dreamliner becomes reality

SEATTLE Sun Sep 25, 2011 6:57pm EDT

A 787 Dreamliner flies over Boeing Commercial Airplanes manufacturing facilities at Paine Field, Everett, Washington during the jetliner's certification event on August 26, 2011. REUTERS/Anthony Bolante

A 787 Dreamliner flies over Boeing Commercial Airplanes manufacturing facilities at Paine Field, Everett, Washington during the jetliner's certification event on August 26, 2011.

Credit: Reuters/Anthony Bolante

SEATTLE (Reuters) - Boeing's long-awaited dream machine became a commercial reality on Sunday when the lightweight plastic-composites 787 Dreamliner was formally delivered to its first Japanese customer.

Boeing says the revolutionary carbon fiber design will hand 20 percent fuel savings to airlines struggling to avoid a new recession, and give passengers a more comfortable ride with better cabin air and large electronically dimmable windows.

The first $200 million aircraft was handed over to Japanese carrier All Nippon Airways three years behind schedule after persistent delays that cost Boeing billions of dollars.

"It took a lot of hard work to get to this day," said Scott Fancher, vice president and general manager of the 787 program, at the outset of two days of celebrations at the plane's Seattle production plant.

The blue and white-painted long-range aircraft, which boasts a graceful new design with raked wingtips, will leave for Japan on Tuesday and enter service domestically on October 26.

Boeing has taken orders for 821 Dreamliners, which will compete with the future Airbus A350, due in 2013.

The much-anticipated handover came a week after another major first delivery -- the 747-8 Freighter -- was abruptly postponed in a contract dispute with the customer. ANA, the world's ninth largest airline by revenues, plans to coax the airplane into service on domestic routes before putting it on longer international routes like Frankfurt, Germany.

The aircraft goes 52 percent further than the all-metal Boeing 767 which it is designed to replace while using 20 percent less fuel for the distance flown, an ANA executive said.

In a classic roll of the dice in the high-stakes aerospace industry, Boeing abandoned plans for a sound barrier-chasing "Sonic Cruiser" a decade ago and worked on lighter long-range jets as cash-starved airlines valued efficiency over speed.

The resulting composites-based technology proved popular with airlines, forcing Airbus to turn its back on the aluminum airframe for its next generation of jets. Boeing expects this to become the standard for future passenger planes.

"Technology will only get more efficient and lighter," said the 787 program's chief project engineer Mike Sinnett.

BUYER CONFIDENT ON RAMP-UP

The plane's lighter weight allows airlines to operate routes even when the demand is insufficient for larger aircraft like the Boeing 777 or 747, or the Airbus 380 superjumbo.

"For aviation we believe this is as important as the 707 was with the introduction of the jet age," Fancher said.

He moved to head off any fears over the new materials, stressing tough composites were nothing like ordinary plastic.

"Plastic is what you have on the dashboard of your car. This is not plastic," he told reporters.

The 787 development program has been delayed seven times due to challenges with engineering, supply chain glitches and a 58-day labor strike in 2008. [ID:nS1E78O09V]

"We have been waiting for the 787 for over 3 years as we expected it in the summer of 2008," said senior vice president Satoru Fujiki who took part in negotiations to buy the 787.

"I can't say the delayed delivery didn't have any impact but ANA and Boeing worked closely to mitigate it," he said, adding Boeing had provided alternative jets to meet the shortfall.

ANA has ordered a total of 55 Dreamliners worth $11 billion at current list prices, including 40 of the 260-passenger 787-8 variant being delivered this week. #

ANA plans to take delivery of 4 planes in 2011 and an additional 8 next year. "By the end of 2017 we will get all our 787's so it is catching up on all our deliveries."

The Seattle Times reported on Sunday that 787 program costs had topped $32 billion due to delays. That estimate raised questions, the newspaper said, over whether the new jet would make money for Boeing before "well into the 2020s, if ever."

Boeing declined comment.

Analysts say new jets typically cost closer to $15 billion.

Boeing also faces Wall Street concerns over its ability to reach its target of lifting output to 10 planes a month by 2013.

"Boeing still has to achieve a smooth production ramp-up and still has to do rework on some 40 airplanes that it says will take years to complete," aerospace analyst Scott Hamilton said.

Asked how confident he was that Boeing would stick to its latest output goals, ANA's Fujiki said: "We are quite confident in Boeing's ability to deliver on schedule this time."

Also uncertain is how many planes Boeing must sell to break even, something the company is not yet saying.

"If it is 1,200, they should make money; if it is larger than that it could be challenging," Hamilton said.

The delivery comes as Boeing remains locked in a dispute with one of its top labor unions in Washington state, where it has traditionally built its aircraft.

The International Association of Machinists and the National Labor Relations Board accuse Boeing of building a non-union 787 plant in South Carolina to punish the IAM for past strikes.

Boeing denies that claim, saying the jobs in South Carolina represent new employment, not the relocation of existing work. The issue has become a political lightning rod, with Republicans denouncing the Democratically controlled NLRB as being unfriendly to U.S. companies.

(Additional reporting by Kyle Peterson, Editing by Dale Hudson and Diane Craft)