Analysts not sure fourth Boeing Dreamliner 787 delay will be last

Boeing Co. has said it all before -- that early production problems are forcing delays in its hot-selling 787 jetliner.

So will the fourth time be the charm?

Analysts weren't rushing to place any bets Wednesday after the aircraft maker announced another six-month delay, pushing the jet's inaugural test flight into the fourth quarter of this year and its commercial service debut until the third quarter of 2009.

Some seemed willing to give Boeing the benefit of the doubt, believing it has built in enough wiggle room to put its new targets within reach. Others said the company simply has no choice but to deliver on its promises this time.

''I can't imagine they would squander the last opportunity for confidence-building,'' said Richard Aboulafia, an analyst with the aerospace consulting firm Teal Group.

The latest delays -- the third time Boeing has pushed back initial delivery and the fourth time it's bumped the start of flight testing -- will likely cost the company billions of dollars in additional research and development spending as well as penalties from airlines that get their planes late.

They also underscore the difficulty Boeing is having with a production model that relies more heavily than ever on outside contractors for the design and manufacture of huge components.

Still, Boeing shares rose nearly 5 percent to $78.60 Tuesday. The stock had slipped in recent weeks amid rumors that another delay was likely.

In a research note to investors, the investment firm D.A. Davidson & Co. noted that ''some had speculated that the delay would have been longer (signaling more troubles) or shorter (a lack of realism).''

Boeing had initially planned to begin test flights last August or September and deliver the first plane to Japan's All Nippon Airways this May -- a delivery it had recently rescheduled to early 2009.

A statement from All Nippon Airways made it clear the airline is running out of patience: ''We are extremely disappointed: This is the third delay in the delivery of the first aircraft, and we still have no details about the full delivery schedule.''

Northwest Airlines Corp. is the first North American carrier in line to fly the 787. It sounded a slightly more forgiving tone.

''We are disappointed by the delay, but we still believe the 787 will be a game-changing airplane for our fleet,'' spokesman Dean Breest said.

To date, Boeing has booked some 892 orders from nearly 60 customers, making the 787 order backlog worth $151 billion.

No 787 customer has yet to cancel an order for the new jet, which will be the world's the world's first large commercial airplane made mostly of carbon-fiber composites, which are lighter and more durable than aluminum and don't corrode like metals. Boeing says it will be cheaper to maintain and offer greater fuel efficiency and more passenger comforts than comparable planes flying today.

Boeing has not indicated how much it expects penalties for late deliveries will cost the company, but it stuck to its earnings guidance for 2008 and said it expects strong earnings-per-share growth for 2009. The company said it will disclose more financial details when it reports first-quarter earnings April 23.

The company blamed the newest delay in part on slower-than-expected progress on work that suppliers didn't complete -- and which Boeing has had to do on the final assembly line -- and on engineering changes that had to be made on the plane's center wing box.

Engineers recently discovered that the center wing box, which connects the plane's wings to the fuselage and holds fuel, needed to be stiffened. That required the addition of hundreds more clips and fasteners, said Pat Shanahan, vice president and general manager of the 787 program.

Shanahan said he's confident Boeing will hit its new targets because of extra time he's built into the schedule and because there's a lower risk of time-consuming surprises in the remaining work on the first airplane.

''There are no technical inventions needed here. It's a matter of burning through the work,'' he said on a conference call.

Boeing now anticipates delivering a total of 25 of the new airplanes in 2009, down from the originally planned 112.

Citing what it characterized as substantial progress on the assembly line, Boeing said it will power up the first aircraft by the end of June, when it also will begin final assembly of the third and fourth 787s.

The company also revised the scheduling of the different 787 models, saying the larger 787-9 now will follow the original 787, with first delivery planned for 2012, while the shorter-range 787-3 that originally was pegged for a 2010 delivery will be pushed back behind the 787-9.

Cai von Rumohr of Cowen and Co. said it may be months before it becomes clear whether the program's schedule is likely to slip again. ''We continue to believe that the critical milestone for determining whether all the bad news is on the table is apt to be a week or two after first flight'' in the fourth quarter, he said in a note to investors.

Von Rumohr estimated that Boeing could face extra costs exceeding $4 billion because of the delays and late penalties to the airlines. The company earned $4.1 billion in 2007.

The delays come as Boeing is gearing up to negotiate new contracts with the machinists who assemble its planes and the engineers and technical workers who design and test them.

''A strike is a real risk to the delivery schedule, but Boeing has built in a couple extra months ... for random things that might come up, and maybe they consider a potential strike as one of those random things,'' said Peter Jacobs, an analyst with Ragen MacKenzie, a division of Wells Fargo Investments.