- First delivery now expected in early 2009
- No impact on 2007 financials; no material impact on 2008 earnings guidance
EVERETT, Jan. 16, 2008 -- Boeing [NYSE:BA] today announced that first flight of the 787 has been moved from the end of the first quarter of this year to around the end of the second quarter to provide additional time to complete assembly of the first airplane. Deliveries are now expected to begin in early 2009, rather than late 2008.
"The fundamental design and technologies of the 787 remain sound," said Scott Carson, president and CEO of Boeing Commercial Airplanes. "However, we continue to be challenged by start-up issues in our factory and in our extended global supply-chain."
Carson said that while solid progress has been made on the assembly of Airplane #1, the rate at which jobs are being completed has not improved sufficiently to maintain the current schedule.
"Our revised schedule is based upon updated assessments from the 787 management team of the progress we have made and the lessons we have learned to date. This includes our experience on the factory floor completing production work on the airplane that was originally intended to be done by our suppliers," Carson said.
Over the next several weeks, Boeing will be working with its customers and suppliers to assess the specific impacts of the schedule change on the 787's flight test program and entry into service. This effort will include an assessment of supplier progress in meeting their commitments to deliver more complete assemblies on subsequent airplanes.
"We are deeply disappointed by what this delay means for our customers, and we are committed to working closely with them as we assess the impact on our delivery schedules," Carson said.
Under 787 Vice President and General Manager Pat Shanahan, who assumed leadership of the 787 program last October, Boeing has provided additional resources to more effectively manage the 787 global supply chain. The company has assembled a team of experienced executives, business managers and planning specialists that will be based at the supplier partners, as well as in its own final assembly facility.
"We have brought together the right skills and leadership from around the company to ensure a successful start-up of our global production system," said Shanahan. "We have put the people, structure and processes in place to execute our plan and we will take additional steps to strengthen our team if needed. We have made significant progress in reducing parts shortages, improving fastener availability and achieving static and systems test milestones. We are focused on getting the 787 flying, certified and delivered to our customers."
Boeing's 2008 financial guidance will be updated with the impact of these changes when the company holds its fourth-quarter 2007 earnings conference call on January 30. There will be no impact from the schedule change on 2007 financial results and the company does not expect the impact on 2008 earnings guidance to be significant. Financial guidance for 2009 now will be provided when the company issues its first quarter 2008 earnings report in late April, which will follow the assessment of the impact of 787 schedule changes. The company continues to expect strong earnings per share growth in 2009. The outlook for the company's defense business and in-production commercial airplane programs remains very strong.
Boeing will hold a conference call with Scott Carson and Pat Shanahan to discuss the 787 schedule changes today at 11:00 a.m. EST, 8:00 a.m. PST. The call will be accessible by clicking here.
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