Boeing hopes of $35 billion ME orders dip

The US aircraft giant said the delays were due to the schedule being disrupted by early problems in assembling the first 787. The first deliveries to All Nippon Airways will now be in November or December next year instead of May 2008.

The 787 Dreamliner, created with space-age material, has been pitted against the rival aircraft maker's Airbus A350 XWB in a race to win several billions worth of orders from Gulf carriers including Emirates, Qatar Airways, Saudia and Etihad. Together, these potential buyers have requirements for mid-sized planes estimated at more than $35 billion. The bulk of these orders was expected to be announced at the next month's Dubai Air Show.

Boeing's setback came at a crucial time when Emirates is expected to choose between the two transatlantic rivals for its requirement for more than a 100 mid-sized 330-seat aircraft. The order, valued at more than $24 billion, is aimed at replacing its existing Airbus A330 and Boeing 777 aircraft by 2012-2013. Other UAE carriers, including Etihad and the Sharjah-based low-cost carrier Air Arabia have also been weighing these two rival aircraft models for their ambitious route expansion plans.

Boeing's Chairman and CEO Jim McNerney said the problems relate to the company's supply chain and not to any structural or design problems.

The Dreamliner, which first rolled out in July, has already won orders for more than 700 aircraft worth $135 billion from 45 customers.

"We are disappointed over the schedule changes that we are announcing today," said 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."

Japan's ANA, the first Boeing 787 customer, and Australia's Qantas Airways Ltd, said yesterday the delivery delay would not have an impact on their operations.

Last month, anticipating a possible delay, Emirates President Tim Clark said it would have been a miracle for Boeing to have flown the 787 on time. He said the delay would not be a factor in the airline's evaluation of the 787 and A350 for its order for 100 aircraft.

Talking to ATWOnline, Clark said the 787 will be one of the finest aircraft ever built. "If you think about it, there is just so much new technology in the 787; it is no surprise at all there is a short delay and the supply chain has let [Boeing] down." He also is bullish that the company will get the 747-8I right for the Emirates range specification.

Yesterday, Clark was quoted by Bloomberg as saying that the airline was still weighing the 787 against the A350. "All our studies were based on the fact that the 787 would be delayed into service. But unlike the A380 delay, when we were at the front end of the order stream, this delay really has no bearing on us," Clark was quoted by the news agency.

While ANA would not comment on the content of its contract with Boeing, including whether Boeing could be penalised for any delays, Qantas did not rule out seeking compensation. It said the first of its 15 Dreamliners would not arrive in August 2008 as scheduled, instead being delivered some time in the following six months. The 14 remaining Dreamliners will all be delivered by 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," Qantas chief executive Geoff Dixon said in a statement.

The Boeing setback came a few days ahead of the maiden commercial flight of the delay-plagued Airbus A380 superjumbo with Singapore Airlines, almost two years behind schedule.

Boeing, which insisted only last month that its best-selling plane was still on schedule, is blaming its delay on a shortage of parts, particularly fasteners to join the sections of carbon fibre fuselage. The plane-maker, which has more than 700 orders for the new long-haul jet, has planned to deliver 109 Dreamliners by the end of 2009, a schedule viewed by analysts as over-ambitious given the delays.

Aviation experts in Dubai said Boeing's new deadline for first flight is more reasonable.

The news of the delay had an impact yesterday on Boeing's share price, which fell 2.7 per cent on Wall Street. Jefferies & Co. analyst Howard A. Rubel said he did not expect a long-term impact from the slip, what he deemed "a bit of turbulence," and kept a "Buy" rating on the stock and a $122 price target.

Morgan Stanley analyst Heidi Wood said the 787's first flight deadline of the 2008 first quarter and first delivery deadline of November or December of 2008 "looks achievable." Wood, who has a "Buy"-equivalent rating on the stock and a $140 price target, said she still expected airline orders to remain firm.