Boeing delays delivery of 787

On Wednesday, aerospace giant Boeing ba pushed back delivery of its first 787 Dreamliner until as late as December 2008, delaying its earlier target date by more than six months. It's Boeing's worst delivery delay ever.

In a conference call, top Boeing officials blamed the poor quality of some of the outsourced production work and a worldwide shortage of metal fasteners to bolt pieces of the plane together.

Just last month, Boeing postponed initial flight testing of its flagship 787 but said it could deliver the first plane to Japanese airline ANA by May 2008 as planned. On Wednesday, Boeing CEO Jim McNerney said that flight testing will not start until after March 2008. "We are disappointed and deeply regret the impact on our customers," McNerney said.

The 787 delay is Boeing's longest in introducing a new plane, exceeding the three-month delay Boeing had delivering the first 747-400 jumbo jet, said aerospace consultant Richard Aboulafia of the Teal Group in Fairfax, Va.

Even with the six-month delay, Boeing said it expects to produce 109 Dreamliners in 2009, just three fewer than planned, a claim that was met with some skepticism.

"That's pretty unrealistic," Aboulafia said. "At least the aircraft itself still looks like a great performer. The only issues concern development and manufacturing. The thing that would make me panic is negative news about the aircraft's performance."

The twin-engine, double-aisle 787 is the first jetliner with a fuselage built entirely of man-made composite material. It's designed to be lighter, faster and more fuel-efficient than its predecessors. European rival Airbus is years away from having a direct competitor.

Designed for about 250 passengers, the 787 has garnered 710 orders, a record for a plane that hasn't yet flown.

But to produce it quickly in large numbers, Boeing outsourced more of the work to U.S. and foreign suppliers than ever before. It contracted out 70% of the production, and that, in turn, required an unprecedented amount of coordination.

Boeing commercial airplanes chief Scott Carson said "unplanned rework" of some outsourced parts at Boeing's Everett, Wash., plant was a major reason for the delay. Far more production than expected has had to come back to Everett because subcontractors were unable to finish it or the work was substandard. As a result, Boeing workers are having to assemble the first 787 out of the planned sequence, he said.

Boeing's six-month delay is relatively short compared with Airbus' delay on its flagship A380 superjumbo jet. France-based Airbus is running 22 months behind on delivery of the first A380.

Boeing shares closed at $98.68, down 2.7%.