Boeing may delay 787 to 2012, Morgan Stanley says

Boeing Co. may postpone the 787 Dreamliner's entry into service for the seventh time, adding as much as a year to the three-year delay for the composite-plastic jet, Morgan Stanley said.

The plane may not be delivered to the first customer until 2012, because last week's electrical fire during a flight test may prompt a redesign of software and hardware, Heidi Wood, a New York-based analyst with Morgan Stanley, wrote in a note today. She rates the shares “equal-weight.”

The 787 test fleet remains grounded for a ninth day as the investigation continues into the Nov. 9 fire. The Dreamliner is the first airliner built with carbon-fiber composites and uses an all-electric system to save fuel. It has been delayed six times from its original May 2008 target, as Boeing struggles with the new materials, parts shortages, redesign work and a greater reliance on suppliers.

Boeing can't decide when flights will resume until it completes the investigation and assesses whether design changes are necessary, said Lori Gunter, a spokeswoman, reiterating comments made yesterday.

Boeing, based in Chicago, fell 12 cents to $62.66 at 1:12 p.m. in New York Stock Exchange composite trading. The shares have fallen 11 percent since the day before the fire, after having gained 30 percent this year through Nov. 8.

The company brought two of the six test jets back to its Seattle base yesterday, indicating that there's not a quick fix, Wood said, adding that she doesn't expect flights to resume until late December or early 2011. The jet that caught fire remains in Laredo, Texas, where it landed. Crews are replacing the power panel that failed and are still investigating the cause behind it, Boeing said yesterday.

The 787 has been flying since December 2009 in tests toward certification for passenger service, which currently is targeted for the first quarter of 2011. The six planes fly around the world in search of various weather conditions for tests required by the U.S. Federal Aviation Administration.

The issue appears “bigger than a simple, single component failure,” Wood wrote. “Redesign may be necessary and it looks like this affects at a minimum the test-flight airplanes, potentially the 28-odd planes already built.”

Boeing has been assembling Dreamliners at its factory in Everett, Washington, and storing them there in preparation for next year's delivery start.