The Associated Press
Boeing says its 787 aircraft will be ready for its first test flight by the end of this year and its initial delivery by the end of next year, sending its shares higher as it gives some clarity to a program that has been delayed five times already.
Boeing originally scheduled the 787's first test for the fall of 2007. But production problems have forced the company to postpone trial flights for the next-generation passenger jet. The first delivery to Japan's All Nippon Airways Co.is now more than two years behind its original schedule.
After so many false starts, airline customers and Wall Street are more skeptical of Boeing's timetable for the 787, built with lightweight carbon composite parts for fuel efficiency.
With a new test date set for now, shares of Boeing rose $4.16, or 8.7 percent, to $51.98 in afternoon trading.
The plane's delays are expected to cost Boeing billions of dollars in penalties and expenses, and they've hurt the Chicago-based company's credibility.
Boeing came under sharp questioning in a conference call Thursday after the announcement. One analyst, Howard Rubel of Jefferies&Co., asked why the company's latest schedule is "any better" than ones issued previously.
Boeing said it will book a pretax charge of $2.5 billion, or $2.21 per share, in the third quarter, including a write-off for the first three test planes, which customers would normally take, but don't want in this case.
With the 787, the company has adopted a new approach to building airplanes, relying on overseas suppliers to build huge sections of the plane that are later assembled at the company's commercial aircraft plant near Seattle.
But ill-fitting parts and other problems have hampered production. The latest delay came in June, when the company said it needed to reinforce areas close to where the wings and fuselage join.
Still, the jet remains Boeing's best-selling new plane and a priority as it struggles with sharply lower orders caused by weak demand for air travel. Boeing currently has 850 orders for the 787. Seventy-three orders have been canceled so far this year.
The company and some analysts say the 787 - Boeing's first all-new jetliner since the 777 - eventually will prove a financial and technological success.
"I am confident the team can address the remaining development challenges," Pat Shanahan, general manager of airplane programs for Boeing's commercial division, said during Thursday's conference call.
But not everyone is convinced. Troy Lahr, an analyst at Stifel Nicolaus&Co., said the new schedule is "achievable," but that the program has lost credibility.
"We're not holding our breath," he said.