When Boeing Co. unveiled plans to build the 787 Dreamliner, the aircraft was touted as revolutionary, a major technological shift in the way a plane is made and in the way it operates. But revolutions rarely come without a struggle.
The 787 is now more than two years behind schedule and by some estimates is costing Boeing $4 billion more than planned to develop. The troubled jetliner has set back other Boeing projects, analysts say, and has left some suppliers financially strapped.
One major supplier, Vought Aircraft Industries Inc., initially projected it would spend $250 million for tools and machinery to make parts for the aircraft. By July, costs had ballooned to $600 million. The company this summer sold its 787 fuselage assembly operation to Boeing.
“Financial demands of the 787 program were beyond what the company’s balance sheet could support,” said Lynne Warne, a Vought spokeswoman.
Boeing’s acquisition of Vought’s factory – completed so Boeing could have more control over a key aircraft part – marked a major reversal in the company’s strategy and highlighted the pitfalls of making planes that not only use new materials but are assembled in a radically different way.
The 787 is the first large passenger jet to have more than half its structure made of composite materials (carbon fibers meshed together with epoxy) instead of aluminum sheets. Major parts for the plane are to be preassembled elsewhere and shipped to Everett, where they are to be “snapped together” in three days as opposed to the month the traditional way takes.
“Any time you’re dealing with new material and new techniques, there’s bound to be disruptions in development,” said Richard Aboulafia, an aerospace analyst with the Teal Group Corp., a Virginia-based research firm.
Boeing declined to comment for this article but has said that the delays are the inevitable result of developing a new aircraft with a new manufacturing method.
For now, it appears travelers won’t be flying in the plane soon. Initially scheduled to fly passengers in May 2008, Boeing has said that won’t happen until later next year.
The effect of the delay has been far-reaching, hurting 787 suppliers and parts makers stretching from Southern California to Russia, Japan and Italy. There are about 50 suppliers in California alone.
“These companies haven’t been paid because Boeing has yet to deliver a plane,” said Scott Hamilton, an aviation industry consultant and managing director of Leeham Co. in Issaquah, Wash.
Suppliers refused to talk about their predicament out of fear of hurting their relations with Boeing, but analysts said some parts makers took on more risk when they signed on for the project than they had for any other aircraft development.
In an unusual arrangement, major suppliers agreed to pay upfront costs for things such as labor and tooling. The risk was considered worth taking because the 787 was considered the plane of the future, an aircraft that would be in service for the better part of the century. But some suppliers are facing escalating costs that have more than doubled in some cases.
Few disagree that once the 787 gets off the ground, it will be a game changer for the aviation industry. The plane’s newly developed engine promises to burn 20 percent less fuel than jetliners of a similar size. It will seat about 250 passengers, compared with about 150 for Boeing’s most popular 737 jet, and Boeing says it will require less maintenance because it has fewer parts and will sustain less corrosion. In all, Boeing says 787s, which cost about $160 million each, will save airlines about 30 percent in maintenance expenses.
But the 787 has been delayed five times since October 2007. Many of the hitches have resulted from the new production method.
Prior to the 787, suppliers made parts from blueprints given to them by Boeing. For the 787, suppliers have been responsible for design and getting designs approved by safety regulators.
Suppliers also have struggled in handling various languages and cultures. Wings are made in Japan, fuselage sections in Italy.
Boeing has tried to simplify the process.
The company bought Vought’s 787 fuselage assembly operations in South Carolina after work at the facility continued to have problems. It also acquired Vought’s 50 percent stake in Global Aeronautica, a joint venture with Alenia North America, which is a unit of Italy’s Finmeccanica.
Even with all the hang-ups, Boeing is not alone, said Tom Captain, principal and vice chairman of Deloitte’s aerospace and defense practice. Cost overruns and delays have become typical in the aviation business, he said.
Captain said aviation businesses’ marketing and sales divisions pressure engineers to keep prices low. Engineers then try to cut back on production schedules, which puts aircraft makers in a precarious position when plans don’t go just right. Airbus’ A380 super jumbo jet faced similar development problems.
“The schedules are so aggressive that they assume nothing will go wrong,” Captain said. “There is no wiggle room, and it’s inevitable that some things will go wrong.”
Because Boeing is one of Captain’s clients, he declined to speak directly about the 787 project.
Peter Arment, an aerospace and defense analyst with Broadpoint AmTech in Greenwich, Conn., was more critical of Boeing. “They have blown through cost estimates with this program,” Arment said, noting that Boeing will have racked up extra costs on the 787 that hover around $4 billion.
He also said there were a lot of engineering resources used up on the 787, which came at the expense of other Boeing programs. Last week, for example, Boeing said it would incur a $1 billion charge because of a delay in producing a new version of the 747 freighter jet.
Arment said that was a “direct result” of the 787. Many engineers were pulled off the 747 to address issues on the 787, he said.
If everything had gone according to plan, Boeing would be producing two 787s a week by now. Instead, the company is hoping it can perform its first test flight by the end of the year, with the first delivery to its first airline customer, Japan’s All-Nippon Airways Co., by the fourth quarter next year.
Amid the delays and the sagging economy, Boeing has seen orders canceled for 83 Dreamliners, but it still has a healthy 840 orders, which speaks to the 787’s potential, Aboulafia said.
“It may very well be revolutionary,” he said. “The jury is still out. We just haven’t seen whether it can perform as advertised.”