Boeing 787 Takes Flight

SEATTLE ( TheStreet) -- The two-and-a-half year wait for Boeing's ( BA) 787 ended today when the Dreamliner took flight in its home state.

Pilots Michael Carriker and Randall Neville lifted off at about 10:30 a.m. PST from Everett's Paine Field on a four-hour flight over Washington state to perform a variety of basic tests and systems checks before landing at Seattle's Boeing Field.The huge blue and white aircraft paused for several minutes at the end of the runway, adding to the tension for the several thousand Boeing employees, customers and airline executives standing on the tarmac to watch.

About 25,000 people braved the cold and damp to watch the 787 take off. Paine Field operations director Bruce Goetz says most of the crowd were Boeing employees or members of the general public. Also in the crowd were executives from the airlines that plan to buy the new plane.

Joe Bierce, a flight instructor for Delta Connection traveled from Jacksonville, Fla., for the event.

"It's very historical," said Bierce, noting the plane's many innovations. "I can't think of a thing about it that I'm not impressed with."

Although the runway was lined with fire trucks and other emergency vehicles with lights flashing, the first flight looked like a normal takeoff for an airliner as the huge engines kicked up clouds of mist.

Boeing has had about $3.5 billion in charges (both cash and non-cash) associated with delays in the once-vaunted development program. The flight, which is scheduled to last five hours, will be Webcast on www.boeing.com.
Boeing
The second 787 Dreamliner designated for flight test in Everett, Wash.

Boeing shares were trading at $55.72, down 33 cents, shortly after 3 p.m. EST Tuesday, but the shares are up more than 30% this year. After starting 2009 at $42.80, shares sank to a six-year low around $29 in March before rebounding.

>>Photo Gallery: 787 Dreamliner to Fly by End of 2009

Some airlines have voiced displeasure that their airplanes will not arrive as scheduled. Delta ( DAL), the biggest airline, gives the impression it may not take delivery of the order for 18 aircraft that came with its 2008 acquisition of Northwest. "Boeing has informed Delta that it will be unable to meet the contractual delivery schedule for these aircraft," the carrier reiterated Monday. "We are in discussions with Boeing regarding this situation."

But the airlines may not have anywhere else to go. Airbus has said it expects to start to build the A350XWB, its next-generation composite widebody, early next year. The first delivery would not be for at least five years. At the moment, Boeing plans its first delivery in the fourth quarter of 2010. Originally, the schedule called for the first 787 flight in August 2007, with the first delivery in May 2008.

Most customers are still waiting in line. Boeing has an order list of 840 aircraft to 55 customers, and had 83 cancellations. Last week, United ( UAUA), the third biggest U.S. airline, placed an order for 50 aircraft, starting in 2016.

Also last week, Macquarie Securities analyst Rob Stallard raised his target price for Boeing to $60 from $53. "For Boeing to finally get the 787 into the air is a step in the right direction for the program, following a catalogue of errors and disappointments," Stallard wrote. "We think this will have a positive impact on investor sentiment for the stock, and for the wider aerospace sector."

However, Stallard noted, "Boeing has of course many, many things still to do on the program before first delivery, and we cannot rule out further slippage in the target delivery date of 4Q10."

July 8, 2007 was a day much like today, when Boeing rolled out a model of the aircraft at a high profile event. At the time, Boeing shares were trading close to $99. A few weeks later, they would reach an all-time high of $107.80. But the reality did not match the dream.

This time, "Boeing may be on the ascent, but it's too soon to say," says industry consultant Scott Hamilton, a longtime Boeing-watcher and publisher of an online newsletter focused on aircraft manufacturers. "In my view, they still have to get through the flight test in the advertised time, get the aircraft certified by the advertised time, delivered according to the advertised time, and then have production thereafter within the advertised time."

In a post Tuesday morning, Hamilton noted, "It goes without saying that this (flight) is a long-due event that will (bring) a sigh of relief for all the stakeholders in Boeing and specifically the 787.

"Airplane programs are hard, especially when there are ground-breaking aspects to the development of the product," Hamilton wrote. "When the 787 finally gets into smooth production and past the block points where improvements will bring the aircraft close to specification, the airlines will like it."

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

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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