Dreamliner’s Worsening Nightmare

Following its rushed July 8 rollout, the first 787 was originally to have taken to the air in late September, but this was subsequently pushed back into October and then to December. The revised schedule has been attributed to delays in completing the aircraft’s flight control software, in the build-up of out-of-sequence production work from suppliers working at different rates, and in replacing temporary fasteners with permanent ones.

“We are disappointed over the schedule changes that we are announcing today,” said Boeing chairman, president and chief executive officer 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. ” “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,” observed Boeing Commercial Airplanes (BCA) CEO Scott Carson. “We deeply regret the impact these delays will have on our customers, and we are committed to working with them to minimise any disruption to their plans. The most important commitment we’ve made to our customers is to deliver an airplane that performs to their expectations over the long life of the program.

These changes to our schedule will help ensure we do just that. ” “The issues that led to this week’s announcement are essentially the same ongoing challenges we talked about (in September), including out-of-sequence production work on the structure of the first airplane, and shortages of parts,” BCA’s vice president, marketing, Randy Tinseth said in his blog entry on October 12. “What we discovered is that the work has gone more slowly than we had anticipated. And it became clear that we’d used up the margin to accommodate any unexpected issues. ” Boeing moved fairly quickly to address any perceived management issues with the program, shuffling program head Mike Bair sideways to the position of vice president of business strategy and marketing for BCA, replacing him with its missile defence systems division head, Pat Shanahan. Reportedly noted for getting troubled programs back on track, Shanahan has previously headed up Boeing’s 757 and 767-400 programs.

“It would appear as though Mr Bair is paying for the six to seven month delay anticipated in the aircraft’s first delivery,” Bank of America analyst Robert Stallard said in an October 17 research note.

“While investors may be glad to see senior management taking decisive action on the 787 after the recent questions posed on credibility, a significant body of knowledge will depart with Mike Bair, and it will take time for Mr Shanahan to get up to speed on the program. ” But Bair certainly hasn’t gone quietly, telling a gathering of business leaders in Seattle on October 30 that, in the aftermath of delays in supplying key 787 components such as structural fasteners and flight control software codes, of quality control issues of major fuselage components delivered from key suppliers Alenia and Vought, and issues with the ability of suppliers to ramp up to full rate production, that the manufacturer isre-considering its global supply strategy for future programs.

“Some of these guys we won’t use again,” he bluntly told the gathering in reference to 787 program suppliers.

“Some of them proved incapable of doing it. They just didn’t do what we thought they could do. ” Bair said the 787 production line was swamped with problems with parts supplied by partner companies for the first 787, and was overwhelmed to the point that the program had to be pushed back.

“That whole production system is built for 1200 pieces,” he said. “Everything about it was designed for 1200 parts, (but) we threw 30,000 at it!” With an update of the 777 line and a replacement for the hot-selling 737 range due in the next decade, Boeing would need to expand its already vast facilities at Everett and Renton, both near Seattle, assuming these sites were to be chosen for these future aircraft programs. “The right way to do this would be to have all those big parts across the street so you could just roll them in,” Bair added. “We’ll see on the next airplane programs whether we can accomplish something like that. ” In the meantime, Boeing is hopeful it will have caught up on the latest delays by the end of 2009, with all but three of the originally scheduled 112 aircraft planned to have been delivered by then.

Due to production slots for the aircraft effectively being sold out until 2012, this should not impact forward sales of the 787. “I don’t think this has any major effect on the program,” Airbus COO customers, John Leahy, told Bloomberg. “I don’t think they’ll lose any orders over this. ” Indeed, customer reaction has been relatively muted compared to some of the comments expressed when delays to Airbus’s A380 program were announced in 2005 and 2006. Launch customer ANA expressed regret over the delay.

“We regret that delivery of the 787 will be delayed and we hope to keep the impact of it to a minimum,” an airline spokeswoman told the UK’s online Air & Business Travel News. “Going forward, we will work closely with Boeing on the proposition for actual delivery. ” “This is a brand new plane technology,” ILFC COO John Plueger told Bloomberg. “It’s not a surprise and we’ve communicated to Boeing that we’d rather see it late but have it right. ” Qantas said the delays “will not materially impact” the group’s operations.

“Boeing said the August 2008 aircraft (to Jetstar) would slip, but not by six months,” Qantas CEO Geoff Dixon said in a brief statement on October 12. “Once that aircraft arrives, the remaining 14 aircraft deliveries will be staggered until December 2009.

Once Boeing confirms a revised delivery schedule we will assess the need for any other measures such as delaying the retirement of aircraft. ” Despite the schedule slip, many risks remain in the program. The period from revised first flight to revised first delivery returns to the originally planned but still aggressive eight months, a timeframe that allows for few unexpected discoveries during flight testing. Meanwhile, in order to minimise the delays, production will be in full swing well before the end of the flight test campaign.

Interestingly, US think tank Leeham Company pointed out that, with flight testing now scheduled for the northern summer, there may be a lack of suitable airfields at which to conduct ‘cold-soak’ testing on the 787 until very late in the campaign. In order to achieve certification, the aircraft must be able to be left in minus 30oC conditions for more than 12 hours before being started up and have all electrical and mechanical components operate normally. Apart from Antarctica, only airfields in northern hemisphere countries such as Canada, Norway and Russia have the appropriate climate, and then only in the December to February period, and Leeham predicts the need to conduct and thoroughly analyse these cold soak trials may mean first deliveries may slip further until the end of the first quarter in 2009.

A separate report from Leeham has also raised the possibility of the 787’s delays flowing to Boeing’s follow-on 777F and 747-8 programs. It says that, despite outward confidence from Boeing that they remain on track, it has been told by customers and other sources that the 787’s delayed flight test campaign and the resources allocated to it will overlap that planned for the 777F and that, as a consequence, the flight test campaign schedule for the freighter version of the 777 is “under review. ” The report also claims that engineering resources have been diverted to the 787 from the 747-8 program, and that the new version of the 747 may also be late due to delays in getting access to much of the GEnx engine flight test data expected to be gleaned from the 787 program.

A Boeing spokesman told Leeham there would be no delays to the other programs. “Despite the 787 schedule change, we remain on track for our first delivery of the 777 Freighter in the fourth quarter of 2008. Likewise, the 747-8 Freighter remains on schedule to deliver in late 2009. ” However, 747-8 customers weren’t so sure. “Whether I’m justifiably concerned, I don’t know yet,” an unnamed 747-8F customer was quoted as telling Leeham. “We’re still talking about not insignificant work on systems and everything that I’ve heard is this is still a large issue. ” “I think it’s going to be a challenge,” the customer reportedly added. “Our impression is that nobody’s declared a problem for the 747 because they haven’t reached milestones. At best, Boeing is struggling to maintain schedule.

At worst, they will be behind and they will have to take some action. ” o