Friday, August 27, 2010

Boeing announces delivery delay for the 787

Boeing sent out a press release early (very early) this morning. Here is the text of the press release:

Boeing Sets 787 First Delivery Date for Mid-First Quarter 2011

EVERETT, Wash., Aug. 27 /PRNewswire-FirstCall/ -- The Boeing (NYSE: BA)Company said today that it now expects delivery of the first 787 in the middle of the first quarter 2011.

The delivery date revision follows an assessment of the availability of an engine needed for the final phases of flight test this fall.

While Boeing works closely with Rolls-Royce to expedite engine availability, flight testing across the test fleet continues as planned.

Boeing said last month that the cumulative impact of a series of issues, including supplier workmanship issues related to the horizontal stabilizer and instrumentation delays, could push first delivery of the 787 a few weeks into 2011. The delay in engine availability has extended that estimate to mid-first quarter 2011.

The schedule revision will not affect the company's financial guidance.Analysis

This is totally expected by many and now is made official by Boeing. Boeing had only passed the half way mark of the test flight program only recently and still has over 1500 flight hours of testing to complete. Boeing cited instrumentation reconfiguration as well as the horizontal stabilizer issues but the straw that broke the camels back for first delivery was the Trent 1000 issue and the uncontained failure that took place on August 2nd. Boeing and Rolls Royce are citing the delay of delivering the Trent 1000 package "B" for the last part of test flight.

The package "B" Trents are the improved Trent 1000 engines which brings the engine in line with fuel burn guarantees provided to customers. It also has modifications to the failed parts so that there would not be a recurrence of the failure that was seen. Boeing has also said that the flight test program will continue but I am not sure if the current package "A" Trents that are now hanging of the 4 test flight airplanes will have restrictions place on their operating envelope due to this failure.

Another question is if Boeing and Rolls Royce will equip the early production 787s for ANA with the package "A" Trents with modifications or will they equip them outright with the package "B"s?

In terms of an impact to Boeing earnings, I expect that it will be negligible, Boeing was only expecting to deliver a couple of 787s to ANA this year. Most of the 787s that are built are to be delivered in 2011 and that's when Boeing would see the real income flowing from the 787 program.

With the 6 additional weeks for testing how much does Boeing need to fly the 787 to get to the end of certification? Assuming that Boeing would continue test flight into the end of January, 2011 this would equate to 158 days from now. Boeing still has to fly 1,515 total hours on the 787 and of those hours 982.5 have to be flown on the Trent 1000 aircraft. This means that Boeing will have to fly the Trent powered airplanes an average of 6.2 hours per day every day until January 31st, 2011. They would have to fly 9.58 hours a day everyday spread across both the Rolls Royce and GE powered airplanes.

Flightblogger has also been following this story very closely and has an article up on the delay to first delivery of the 787. His article give a lot of great detail to the issues facing the Trent 1000:

Flightblogger: 787 first delivery delayed to mid-Q1 2011

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