Boeing again delays the 787 Dreamliner

Already two years behind schedule, Boeing (BA) announced today that the maiden flight of the 787 Dreamliner will again be delayed. This is now the fifth delay of the initial flight of the next generation aircraft, which has been held up due to production issues and a labor strike. This delay comes as an area within the side-body section of the aircraft needs to be reinforced. Boeing said a new delivery timetable won’t be available for several weeks.

The 787 Dreamliner marked a new era for Boeing, which drastically improved their use of lighter materials as well as streamlined manufacturing and assembly processes. The company also factored in their customer’s financing needs at the design stage for the first time.

The most significant change – and in my opinion the biggest reason for the many delays – might be Boeing’s increased use of outside suppliers from Japan, Italy, and the U.S. for the development and manufacturing of the aircraft. This change made Boeing more of a systems integrator instead of a manufacturer. Consequently, this transformation has been met with many unexpected challenges in the design and engineering processes as well as the way it manages its global supply chain.

Still, the order backlog suggests the aircraft has been highly successful. Despite deferrals and cancelations related to the global recession, Boeing’s order backlog equals about seven years of production. The problem in the near-term is determining when Boeing will reach full production – before this delay it was suppose to be in the second half of 2012. On the bright side (maybe), the company said they are actively looking at a second assembly line that would amp up the full production rate.

Shares are currently down more than 7%.

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Peter J. Lazaroff