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Take Off For Boeing's Dreamliner Happens 3 Years Behind Schedule

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Originally, the launch was planned for 2008 and delays have since cost Boeing billions of dollars. (Image: Stock.xchng)
Originally, the launch was planned for 2008 and delays have since cost Boeing billions of dollars. (Image: Stock.xchng)

BUSINESS

  • Boeing’s new 787 Dreamliner completes first flight
  • Flight launch delayed due to global shared workload of aircraft pieces
  • Airlines cutting back Dreamline orders
  • Boeing sees improved Q3 share price

Boeing’s new 787 Dreamliner has completed its inaugural flight from Hong Kong to Tokyo, operated by All Nippon Airways Co. (ANA), after a long three-year launch delay. The Dreamliner was first publicized nine years ago as Boeing’s reaction to the airline industry’s financial fall-out post September 11.

Originally, the launch was planned for 2008, and delays have since cost Boeing billions of dollars, but ANA President and CEO Shinichiro Ito still calls the Dreamliner a “game changer.”

Competitivity Factor: Adjusting Product Offering

The crisis affected profits and forced Boeing and other airlines to adjust their product offering. "For carriers with high operating margins, the 787 is critical for gaining a cost competitiveness," Masaharu Hirokane, an analyst at Nomura Holding in Tokyo told Reuters. "For ANA to be a launch customer is a plus."

The aircraft, which is manufactured mostly from carbon fiber and features improved fuel efficiency and requires lower maintenance fees, is built in several pieces around the world; this shared workload is reportedly the cause of launch delays. However, if this can be fixed, the Dreamliner may be the aircraft of the future – with over 800 orders already booked.

The Dreamliner seats 240 passengers and can fly up to 9,400 miles, which is roughly the distance between Sydney and Chicago, without re-fueling. The cabin features ambient lighting to soothe passengers to sleep, higher air pressure for traveler comfort, and quieter engines. In addition, windows in the body of the aircraft are 30% bigger than normal and can be dimmed with the push of a button.

The Dreamliner features seat-to-seat email, which allows travellers to communicate with fellow passengers.

Airlines Pull Out

While there are hundreds of orders booked for the Dreamliner, a few airlines are pulling out or cutting back their orders. State-run Air India is planning to cut its order in half due to over $9 billion of debt, India's Economic Times said. A week earlier, China Eastern also announced it was canceling 24 orders of the aircraft.

When referring to Boeing’s 787 Dreamliner target, Alex Hamilton, managing director of EarlyBirdCapital, a registered broker-dealer, told Reuters: "All this highlights the risk to the 787 backlog, especially if they can't get to 10 per month." Currently, Boeing is manufacturing two 787’s every month, and plans are in place to increase to 10 per month by the close of 2013.

Quantas Airways has committed to its order as has Air New Zealand and Korean Air Lines. "Frankly as we look forward, we expect to see the Dreamliner order base increase, we expect to see more orders, we expect to see more cancellations, especially as we go through mitigation with our customers," Boeing marketing vice president Randy Tinseth said during a briefing in Seoul.

Regardless of cancelled orders, Boeing is keeping a positive outlook after its successful Q3 financial results; the company outdid profit estimates for the quarter that saw the launch of the 787 Dreamliner. Production costs will be spread out over 1,100 aircrafts, and Boeing’s CFO James Bell told Bloomberg he expects that by late 2014 or early 2015, the costs of the aircraft will start to decrease, and the planes will begin to bring in a profit.

Average analysts’ estimates in a Bloomberg study of $1.10 a share, were succeeded by Boeing’s third-quarter earnings of $1.46 a share. This increased share price is due to improved productivity and the greater number of planes more expensive planes.

Key Statistics – Boeing 787 Dreamliner (source: Associated Press)

  • The Dreamliner’s first passenger flight took place on Oct. 26, 2011 from Tokyo to Hong Kong on Japan’s All Nippon Airways.
  • The aircraft seats from 210 to 250 people, and can fly between 8,800 to 9,400 miles
  • The wingspan is 197 feet; the body is 186 feet long and 56 feet high; and cargo volume is 4,400 cubic feet, which can carry 502,50 pounds.
  • The airline is made of 50% carbon fiber, 20% aluminum, 15% titanium, 10% steel, 5% other, and has a maximum takeoff weight of 502,500 pounds.
  • Although airlines do negotiate the price, the final listed price of the Dreamliner is over $193 million.

By Stephanie Lagopoulos for
Based in Toronto, Stephanie Lagopoulos is a freelance journalist covering lifestyle, travel and technology. She also works in the advertising industry.

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