Boeing delays 787 test flight due to strike

[November 05, 2008]  WASHINGTON (AP) -- Boeing Co. said Tuesday the first test flight of its long-delayed 787 jetliner has been postponed until next year due to an eight-week strike by union workers.

The Chicago-based airplane maker had scheduled the inaugural flight of the next-generation passenger jet -- delayed four times already -- for the fourth quarter of this year.

But Boeing spokesman Jim Proulx said the strike, which started Sept. 6 and forced the company to temporarily shut its commercial aircraft business, had pushed back the test flight to an unspecified time next year.

"Given the duration of the ... work stoppage, first flight of the 787 will not be accomplished in the fourth quarter 2008," he said. "The time frame for first flight has not been established and will be based on the strike recovery assessment."

The postponement was the latest of several delays of the hot-selling 787, which is expected to provide high fuel efficiency because of its construction from lightweight carbon composite parts.

Even before the strike, the highly anticipated airplane had been hampered by lengthy delays caused by production glitches partly due to a reliance on overseas suppliers. The company has lost credibility, and billions of dollars in expected additional costs and penalties, with the delays leaving the 787 more than a year behind the original schedule.

Boeing, which also produces 737, 747, 767 and 777 jetliners, postponed 787 test flights in September and October of 2007 and January and April of this year.

The strike ended Saturday after the Machinists union, representing 27,000 workers in Washington state, Oregon and Kansas, ratified a four-year contract with the company. Workers began returning to Boeing's commercial aircraft plants Sunday night.

The standoff cost Boeing an estimated $100 million per day in deferred revenue. Last month, Boeing said its third-quarter profit sank 38 percent to $695 million, or 96 cents per share, because of the strike and supplier problems. The strike cut earnings by about 35 cents per share, the supplier problems by 25 cents.

Boeing officials have said the company is conducting an assessment to determine the strike's effect on its production schedule. Proulx said a revised 787 schedule will be announced when the assessment is complete.

Scott Hamilton, an aviation consultant and managing director of Leeham Cos. in Sammamish, Wash., said he believes the test flight may not happen until the second quarter.

The mounting delays, he said, are "the cumulative effect of issues they find in putting these airplanes together, as well as the strike impact."

Boeing, the world's second-largest commercial airplane maker after Europe's Airbus, has roughly 900 orders for the 787. The first airline scheduled to receive one of the planes, All Nippon Airways Co., has said it expects to get its first one next August. One airline has substituted its order for a 787 with a 767.

The 787 is Boeing's first newly designed jet since airlines started flying the 777 in 1995, and it will be the world's first large commercial airplane made mostly of the carbon-fiber composites, which are more durable than aluminum.

Last month, Boeing said demand for new, fuel-efficient planes remained strong and exceeded supply.

Also Tuesday, Boeing said it discovered some fasteners that had been "incorrectly installed and do not conform to specifications" on 787 airplanes at one of its commercial aircraft plants near Seattle.

Proulx, the Boeing spokesman, declined to indicate whether the fastener problem contributed to the 787 test flight delay.

The fasteners that were incorrectly installed, he said, were not isolated to any particular part of the plane and represent less than 3 percent of the fasteners installed to date. He declined to provide further details about the fasteners, which hold pieces of the plane together like bolts.

The 3 percent of the incorrectly installed fasteners on the 787 represent "a heck of a lot" of the bolt-like pieces, Leeham's Hamilton said.

But he said the delays were unlikely to result in cancellations because "there is really no alternative," with the competing Airbus A350 not ready before 2013 and an order backlog that stretches to 2017 or 2018.

The delays, nonetheless, have come at a price for Boeing.

"Boeing lost their credibility on the 787 program a long time ago," Hamilton added. "What this does is it raises additional questions about what's next."

Shares of Boeing rose 77 cents, or 1.5 percent, to $53.62 on Tuesday. Since the strike ended, Boeing shares have edged up $1.20, or 2.3 percent. Boeing stock has dropped $33, or 38 percent, since the beginning of the year.

___

On the Net:

Boeing Co.: http://www.boeing.com/

[Associated Press; By DANIEL LOVERING]

Associated Press writer Tim Klass in Seattle contributed to this report.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.