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Originally published Friday, May 9, 2008 at 12:00 AM

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Many Dreamliner buyers face delivery delays of more than two years

Last month, Boeing set back the first delivery of its 787 Dreamliner by about 15 months. But many airlines have since discovered the delay...

Seattle Times aerospace reporter

Last month, Boeing set back the first delivery of its 787 Dreamliner by about 15 months. But many airlines have since discovered the delay for their first plane is even worse — between two years and 30 months for some of the largest 787 customers.

When Boeing announced the latest program setback April 9, it pushed out the first delivery to All Nippon Airways of Japan to the third quarter of 2009, a delay of 14 to 16 months past the original plan to deliver it this month.

Executives also announced a dramatically slower ramp-up in planned production: The build rate will reach 10 787s a month in 2012 — two years later than originally planned.

The impact of that slower schedule on customers is only now becoming clear. It's "a cascading ripple effect that delays everything downstream," said industry analyst Scott Hamilton of Leeham.net.

Aircraft-leasing giant International Lease Finance Corp., (ILFC) of Los Angeles, is the largest 787 customer, with 74 Dreamliners on order. It has been told by Boeing it faces an average delay of more than 27 months, according to a regulatory filing Thursday by ILFC's parent company, AIG.

The first 10 of ILFC's aircraft were originally scheduled to be delivered in 2010, with follow-on deliveries running through 2017.

Air Canada, which ordered 37 Dreamliners — the fourth largest sale booked — will have to wait between 24 and 30 months, Chief Executive Montie Brewer said Thursday during a teleconference announcing the airline's first-quarter results.

The airline's first 787 delivery is now expected in January 2012. Brewer said he will seek compensation from Boeing for the delay in receiving the new fuel-efficient jets.

Wanted to save fuel

"We were counting on those aircraft, especially in an environment where you have high fuel prices," said Brewer. "Now they are delayed, and we are going to have to manage through it with aircraft that have higher [fuel] burn rates."

Those delay details followed earlier media reports that three other airlines — Britain's Monarch.; Jordan's Royal Jordanian; and Chile's LAN — had been informed by Boeing of delays exceeding two years.

Boeing spokeswoman Yvonne Leach said the average delay to the first delivery for all 58 Dreamliner customers is working out to about 20 months.

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The precise impact on any one customer depends on exactly where in the delivery schedule its orders fall. The earliest deliveries will be pushed back less than those scheduled a year or two later, Leach said.

Immediately after the April announcement, Boeing began assessing its new schedule and telling customers. Leach said all customers have been informed of the impact "throughout the whole delivery stream."

She said the revised schedule assumes no improvement to production between now and 2012, based on lessons learned or productivity gains.

Ten a month

"It's based on the assumption of 10 a month" in 2012, Leach said. "If we can go above that, great, then we'll do what we can for the customer. But right now, we want to commit to something we know we can do. We don't want to risk disappointing them with any assumptions that we can go up in rate at a later time."

Hamilton said airlines will be pleased enough at last to have a precise number for 787s they can expect, and when.

"In some ways, they are probably relieved to finally know what the number is," said Hamilton. "Now they can plan."

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

Copyright © 2008 The Seattle Times Company

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