CHICAGO (

TheStreet

) --

Boeing

(BA) - Get Report

"went through hell and back on the

787

," but the two years of delay might have a hidden benefit, CEO Jim McNerney said Thursday.

"We had more time than we thought before we had a flight test, (which) is serving us well," McNerney told an investor conference. He said the delay enabled the maturity of software, electrical and other systems. By the time of the first 787 delivery, currently scheduled for this year, Boeing will have built close to 30 aircraft.

Boeing has said it will have zero cash flow in 2010, as the new planes await delivery, but cash flow around $5 billion in 2011. McNerney was optimistic about 2011, saying he sees a profitable year for airlines, as well as improved performance in defense.

On the commercial aviation side, Boeing margins may improve as customers who signed on for the 787-800 decide to move up to the bigger, longer-range 900. Some already have. "There's an opportunity there," McNerney said. "They will be getting more value."

The key is that once Boeing starts to produce the 787, even if it is more than two years late, "we will start getting focused on productivity and pricing (and) get away from all this development effort which we had to get through," he said. "We've got a great innovation; a lot of customers want it, (so) let's drive productivity and pricing and mix."

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The 787 is not the only new Boeing aircraft hitting development schedule targets after a long delay. The 747-800 freighter flew for the first time on Feb. 8. It is 18 feet longer than the 747-400 freighter, providing 16% more cargo space. Its first delivery is also scheduled for this year, with the first delivery of the passenger version in 2011.

As the plane is readied for market, cargo volumes are soaring following precipitous declines of 50% and 60% between 2008 and 2009.

"It's strengthening a little faster than we anticipated," McNerney said. "It bodes well for the company that has invested in the freighter business throughout this downturn." Boeing has also introduced a 777 freighter. McNerney said discussions with new customers for both freight and passenger aircraft are picking up.

Boeing previously said it is sold out for 2010 and overbooked in 2012. McNerney said Wednesday the company is close to being overbooked in 2012 as well.

Although 2009 was difficult, said McNerney, "we have rarely had a year when we had more progress on major programs that will drive the long-term health of the company," including the F-18 program.

On the defense side, while the current year will be flat, 2011 holds promise. "The administration came in as new administrations do and took a hard look at a number of programs: (it) killed a couple and recompeted some others," McNerney said. "We've just got to go win it."

Despite McNerney's positive outlook, delays in key programs have caused problems for Boeing, according to a newly-issued report by aviation consultants Ernest Arvai, Scott Hamilton and Addison Schonland. The report said delays involving the 787, the 747-800 and other programs "have taken the shine off the company's pristine reputation."

Meanwhile, the long-successful 737 and 777 programs face rising competition, not just from Airbus but from emerging manufacturers. Boeing must replace or update both aircraft, the report said. In the meantime, the Airbus A350 is drawing customers who perceive that it will offer new technology than Boeing competitors, the firm said.

At midafternoon Thursday, Boeing stock was at $60.26, up 72 cents.

-- Written by Ted Reed in Charlotte, N.C.

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