Boeing Co. rose the most since June 2006 after saying delivery of the new 787 Dreamliner will be delayed until the third quarter of 2009, no later than analysts had predicted.
The world's No. 2 commercial planemaker also affirmed its 2008 profit forecast in a statement today, even with development costs related to the delay. The 787, whose fuel efficiency amid rising oil prices has made it Boeing's most popular new plane ever, has now been postponed three times since October and is at least 14 months behind the original schedule of May 2008.
The new timeline ``came in on the conservative side of expectations,'' said Myles Walton, an Oppenheimer & Co. analyst in Boston with a ``market perform'' rating on Boeing. ``It's certainly a credible schedule if nothing else goes wrong.''
The 787's latest postponement, while related to parts shortages and greater manufacturing roles for vendors, takes place at a time when Boeing and larger rival Airbus SAS have said they don't expect industry orders to match last year's record. Weaker economies, especially in the U.S., have slowed the growth in travel demand. Airbus's competing A350 model probably won't benefit from the 787 delays because it's scheduled to enter service in 2013 and its delivery slots are full through 2017.
Chicago-based Boeing gained $3.73, or 5 percent, to $78.75 at 1:32 p.m. in New York Stock Exchange trading. The stock earlier reached $79.90, the biggest increase since June 14, 2006.
Second Setback
Boeing had said in January it would send the 787 to first customer, Japan's All Nippon Airways Co., in early 2009. The planemaker has lost a quarter of its market value since first postponing the jet in October. The delays mar what has otherwise been Boeing's most successful new-plane sales campaign ever, with 892 orders valued at about $154.3 billion.
The delay is the second setback for Boeing in six weeks. The company, also the second-biggest defense contractor, on Feb. 29 lost a $35 billion program for U.S. Air Force aerial refueling tankers to Northrop Grumman Corp. and its partner, the parent of Airbus. Boeing had been the only builder of Air Force tankers for more than 50 years.
Boeing said it will now deliver just 25 Dreamliners next year, fewer than a quarter of what had originally been planned. The impact on finances in 2009 will be discussed when first- quarter 2008 earnings are released April 23, Boeing Commercial Airplanes President Scott Carson said on a conference call. The company on Jan. 30 forecast earnings this year of as much as $5.85 a share on revenue of at least $67.5 billion.
`Deep Regret'
The first test flight, a key milestone before deliveries can begin, is now targeted for sometime in the final three months of this year instead of later this quarter. Delivery of aircraft is critical to earnings because manufacturers book sales when a plane is handed over to the customer.
``We deeply regret the disruption and disappointment these changes will cause for our customers, and we will work closely with each of them to minimize the impact,'' Carson said.
He declined to discuss penalties Boeing may have to pay, which analysts including Walton predict will reach billions of dollars. He also wouldn't say how many of the 892 planes on order will be deferred.
Launch customer All Nippon Airways is ``extremely disappointed,'' spokesman Rob Henderson said in an e-mailed statement. ``We still have no details about the full delivery schedule.''
`Addressed the Challenges'
The initial powering up of the 787 will happen before June 30, program manager Pat Shanahan said. Boeing has ``addressed the major challenges that slowed our progress,'' such as parts shortages and engineering changes, he said.
Analysts including Richard Safran of Goldman Sachs Group Inc. and JPMorgan's Joseph B. Nadol stirred talk of a new delay last month. Nadol said March 19 that the chairman of International Lease Finance Corp., the model's biggest customer, was predicting a third-quarter target date because of a design change on the structural box that connects wings to the plane.
In February, Boeing said it had reassigned some senior executives from its defense unit to work on the Dreamliner project. The company also suspended some work on the 787-3 short- haul version, which was ordered by two Japanese airlines and wasn't due to go into service until 2010, so workers could focus on the larger model that's in higher demand.
Variations on Models
The planemaker said today the 787-9, a larger derivative of the model, will take the 787-3's place as the first variant to be produced, with deliveries starting in 2012. A target wasn't given for shipments of the 787-3, which Boeing said it hopes to be able to make even lighter using improvements that will be developed for the 787-9.
The 787, Boeing's first new model since the 777 in 1990, is part of a strategy to reclaim the post of world's largest planemaker. Toulouse, France-based Airbus, a unit of European Aeronautic, Defence & Space Co., surpassed Boeing in 2003.
About half of the Dreamliner will be lighter carbon-fiber composites instead of traditional, heavier aluminum, making it the first airliner of its kind. The reduced weight, along with new engines and modern aerodynamics, will make the plane about 20 percent more fuel-efficient than comparable models. The jet will feature quieter engines and passenger windows that are the largest on any commercial airplane, Boeing has said.
Work With Vendors
The program is also Boeing's first attempt at a production process where suppliers deliver fully completed wing and fuselage parts for final assembly at Boeing's plant in Everett, Washington. To gain more control over the process, Boeing agreed March 28 to buy Vought Aircraft Industries Inc.'s stake in a venture that assembles some of the fuselage sections.
Spirit AeroSystems Holdings Inc., which builds the 787's nose section, said today that Boeing agreed to give it cash advance payments this year as though the 787 were on its original timeline. The first payment, $124 million, will be reflected in Spirit's first-quarter results, the Wichita, Kansas-based partsmaker said in a regulatory filing.
Carson said today the company also added to teams at Japanese suppliers to help improve those partners' production.
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