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Boeing Says 787 Back on Track

Ted Reed

The new chief of the 787 program at Boeing(BA) says he has stepped up oversight of outsourced work on the widely anticipated aircraft, and he assured that the first delivery will occur on schedule late next year.

Boeing also said it can deliver 109 of the new aircraft in 2009, as projected, although it declined to offer specifics of the timetable. "We have not found any fundamental flaws in our production system design that would lead me to believe it's not doable," said Pat Shanahan, during a conference call with analysts and media.

Shanahan took over as vice president and general manager of the 787 program in October, replacing Mike Bair, shortly after Boeing said the first delivery would be pushed back by six months until November or December of 2008.

The first all-composite aircraft, the 787 is distinguished by several factors -- high fuel efficiency, low maintenance, long range, even longer delays in the development of its only competitor, the Airbus A350, and the good fortune to be coming to market as the airline industry enters a period of unprecedented globalization.

However, at this point, Boeing has encountered postponements in a complex, newly designed manufacturing process involving outsourcing to contractors scattered around the world.

In response, Shanahan developed an exacting management method with daily meetings "in a factory within yards of the first airplane," followed by nightly three-to-four-hour meetings with senior officers "to ensure the right processes are being followed and proper discipline is in place.

"The biggest constraint continues to be the traveled work," Shanahan said. "I've spent much of my time redesigning the process so we can accomplish that traveled work, [and] we're starting to turn the corner here."

He said parts shortages are decreasing and "the big push" is to turn on the first aircraft's power in late January. At that point, he said, "our schedule becomes more predictable because our airplane is finally in a state that our factory was designed for."

By contrast, he said, the previous team tried to use "brute force" to complete detail work, "thinking they would break through more quickly" on tasks such as assuring that sufficient fasteners were available to hold the plane together, despite a fastener shortage.

While the 787 is clearly a breakthrough aircraft, the expectation that Boeing can deliver 109 of them in 2009 is probably overly aggressive, said John McMahon, CEO of Shannon, Ireland-based Genesis Lease(GLS), in an interview. The firm, owner of 53 aircraft, could potentially be involved in sale/leaseback arrangements with airlines that acquire 787s.

Assuming that a handful of airplanes are delivered in 2008, delivering the target for the next year would mean production of around nine per month.

"There's no way, in such an early part of the program," McMahon said. "They're right to be ambitious. Unless you set ambitious targets, you're sort of preordained to fail. But with an all-new aircraft, you are inevitably bringing new technology to bear, and new manufacturing processes, and it will probably take longer than everybody would wish."

Delays are not necessarily harmful to Boeing, McMahon noted, because airline customers anticipate them.

"There's a lot of goodwill toward Boeing," he said. "A lot of people are looking forward to the arrival of this aircraft, and there is a recognition that a lot of things have to come together in the right way [and that] Boeing, right now, is hitting some bumps."