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Originally published May 8, 2008 at 12:00 AM | Page modified May 8, 2008 at 11:16 PM

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Many Dreamliner buyers face delivery delays of more than two years

Some of Boeing's largest 787 customers are learning that the delay for receiving their first plane is even worse than previously known — between 2 years and 30 months.

Seattle Times aerospace reporter

Last month, Boeing set back the first delivery of its new 787 Dreamliner by about 15 months. But many airlines have since discovered that the delay for their first plane is even worse — between 2 years and 30 months for some of the largest 787 customers.

When Boeing announced the latest setback to the program on April 9, it pushed out the first delivery to All Nippon Airways (ANA) 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 787 production: the build rate will reach 10 airplanes a month only in 2012 — two years later than originally planned.

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

Aircraft leasing giant International Lease Finance Corp. (ILFC) of Los Angeles, the largest 787 customer with 74 Dreamliners on order, has been told by Boeing it will have to wait an average 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, said chief executive Montie Brewer Thursday on a teleconference announcing the airline's first-quarter results.

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

"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 press reports that three other airlines — Monarch of the U.K.; Royal Jordanian of Jordan; and LAN of Chile — 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.

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

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Immediately after the April announcement, Boeing began assessing its new delivery schedule and telling customers. Leach said all customers have now been fully 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.

"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 to at last have a precise number for the airplanes 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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