Not so dreamy

Written by The Economist | Updated: Jun 27 2009, 01:54am hrs
Only a few days ago staff at Boeing were opening a ceremonial barrel of sake at the factory in Seattle where assembly was starting of the first 787 Dreamliner aircraft to be delivered to All Nippon Airways (ANA), the launch customer. At the ceremony Boeing affirmed that the virgin test flight of the worlds first big airliner to be made largely of composite materials, rather than aluminium, would take place by the end of June. But on Tuesday June 23rd Boeings share price fell by almost 9% when the company announced that because of structural flaws the test flight would be delayed. Boeing said it would take weeks before a further date could be set.

ANA, which is already seeking compensation for the planes being two years late, now faces the prospect that it will not be available for delivery early next year, as had been promised. At the Paris air show this month Scott Carson, who runs the commercial side of Boeing, had confirmed that the first delivery would be in the spring of 2010.

The worrying things about the latest delay are that it comes so late in the process of development and that it relates to stresses where the wings join the fuselage. The stresses appeared in routine testing of wing flexibility. The wings are made in Japan and the fuselage comes mostly from Italy, to be pinned together in Seattle, thus the scope for confusion is immense. All new aircraft face delays as they become technically more complex and as manufacturing methods change in search of greater efficiency. Airbuss A380 super-jumbo was severely delayed mainly because of wiring problems. At first Boeing seemed to think that it had a quick fix for its latest problemwhich would have limited the aircrafts ability to manoeuvrebut subsequently the firm decided to postpone test flying until a more comprehensive solution is found.

Boeing has pushed innovation in both technology and manufacturing to the limit, with its choice of a structure made of carbon fibre reinforced with resin and its decision to outsource much of the aircrafts construction to distant partners. Earlier delays to the 787 were already turning the production of the Dreamliner into an anxious experience. Now it is becoming a nightmare. Getting the global chain of various suppliers to run smoothly has been a difficult task, as parts failed to arrive in a fit state in Seattle for final assembly. A two-month strike by machinists at Boeing added to the delays. Late last year it was discovered that thousands of fasteners on the early test aircraft had been installed incorrectly.

The 787 has been a huge sales success with orders for more than 860 planesthe most Boeing has ever had for a new plane before it even takes off. But the delays have allowed Airbus to notch up sales for its competitor product, the A350, which itself was delayed in its launch by arguments over design size and finance. As for airlines, some might be happy to see their new Boeings delivered later than planned, when the air-travel market might have recovered from its current slump. On the other hand, the new Boeing promises better fuel economy and so great operating savings in an era of high oil prices. Either way, Boeing will have to compensate the airlines. That is what will put a strain on the companys finances, which explains why the share priceafter a steep climb since Marchtook such a tumble on Tuesday.

The Economist Newspaper Limited 2009