Boeing ( BA) said Wednesday that the initial delivery of the 787 Dreamliner, its new passenger carrier, will be delayed by six months. Citing "continuing challenges completing assembly of the first airplanes," Boeing said shipments to customers are slated to begin in November or December 2008, rather than the original target of May. The first test flight is expected to take place around the end of the first quarter. Boeing shares were trading at $97.99 at midday, down 3.4%. The company said the delay would not be material to earnings, and it didn't alter its profit forecast for 2007 and 2008. "We are disappointed over the schedule changes that we are announcing today," said Boeing CEO Jim McNerney. "Notwithstanding the challenges that we are experiencing in bringing forward this game-changing product, we remain confident in the design of the 787, and in the fundamental innovation and technologies that underpin it." As recently as Monday, Boeing said it planned to deliver the 787 on time. "It is still our objective to meet that May 2008 delivery, but in doing that we have had to compress our flight-test schedule," Randy Tinseth, vice president for marketing with Boeing's commercial airplanes division, told reporters in Australia, according to Reuters. Early last month, Boeing disclosed that it would postpone the first flight test until sometime between mid-November and mid-December of this year. It said the use of temporary fasteners had led to a failure to match documentation with work done by contractors. Additionally, there were delays in integrating systems in the flight control software.
The company said Wednesday that the schedule change addresses those matters and allows for additional contingencies. "While we have made some progress over the past several weeks completing work on our early production airplanes and improving parts availability across the production system, the pace of that progress has not been sufficient to support our previous plans for first delivery or first flight," said Scott Carson, CEO of Boeing's commercial airplanes unit. Analyst Robert Stallard of Bank of America said in a research report that while the announcement obviously wasn't good news for Boeing, it will "remove some uncertainty in investors' minds, and it allows management the chance to reassert its credibility and aim for a revised date." Bank of America has a financial relationship with Boeing that includes ownership of 1% or more of the company's equity securities and providing investment banking services.