After years of hesitation and one false start on new wide-body designs, Boeing set the most aggressive development program in its history for the 787. The company’s acknowledgment that it must suffer at least a three-month delay for its first flight and compress the airplane’s delivery schedule to as few as five months—an unprecedented pace—just to keep on track means the heat is really on.

Originally set for late August, first flight will now take place no earlier than mid-November and could slip to mid-December. Boeing vows that delivery to launch customer All Nippon Airways will take place, as scheduled, in late May 2008, although at least one major investor is skeptical and thinks that could slip by another 3-4 months. When the 200-300-seat twinjet rolled out in July, Boeing’s managers said they would need just eight months to complete flight-testing for certification, a noteworthy assertion considering they took 11 months to certify their last all-new product, the 777, and 10.5 months to certify the 777-900ER, the last time they updated an existing model.

So they’ve raised the bar, but as calamitous as the situation sounds, Wall Street shrugged off the news. Boeing’s stock actually rose last week when the slip was announced and its customers remain sanguine (see p. 11). “Boeing has been very open with us and timely in how they made us aware of the situation,” an ANA official says. The airline is not “overly concerned, as Boeing is still confident of delivering the aircraft to us on time.”

The 787s replace ANA’s 767 fleet, which is healthy. So while ANA wants delivery on time, it could absorb a minor slip without upsetting its business plan.

That sentiment is shared by others. A Singapore Airlines official says delays “are not uncommon with new aircraft,” a fact SIA understands well since it was the first to take a two-year hit in the Airbus A380’s delivery schedule.

Scott Carson, president and CEO of Boeing’s aircraft unit, won’t comment on what penalties Boeing might suffer for late shipments. But “a 1-3-month delay scenario would have minimal financial implications for 2008,” he assures analysts.

And for his part, Vice President and 787 Program Manager Mike Bair insists the current first flight window will hold. “We don’t see a high probability, or even a low probability, of [first flight] moving” past the end of the year, he says.

Two facts comfort analysts: Boeing’s woes stem not from deficiencies in the 787’s design, development or production strategy, but from parts shortages and factory floor execution. And, while first flight gets a lot of visibility, the bigger issue for the manufacturer is whether it can meet its long-term delivery promises. Boeing says it will make 112 deliveries by the end of 2009, as promised.

Inevitably, Boeing’s difficulties will be compared to Airbus’s two-year delay on the A380. But that might not be instructive. Boeing’s problems are with its supplier base; Airbus’s were mainly internal. Faced with a wiring mess, Airbus had to revise its production system; Boeing insists its production system is healthy and its parts and assemblies of high quality.

But Airbus also delayed dealing with what turned out to be a systemic production issue as it focused on first delivery. That didn’t work and probably exacerbated its recovery. Boeing is accepting risk by pressing ahead with only minor concessions—it has scrambled the next delivery of a flight-test aircraft in favor of a static test model that is easier to build—to give its supply chain time to catch its breath.