Boeing rises most in six weeks as 787 delivery ends delays

Boeing Co. rose the most in six weeks in New York trading as the delivery of the 787 Dreamliner ended more than three years of delays on the world's first jetliner with a fuselage made of carbon-fiber composites.

All Nippon Airways Co. received the plane today at a ceremony in Everett, Washington. Boeing climbed $1.60, or 2.7 percent, to $61.11 at 1:38 p.m. in New York Stock Exchange composite trading. The shares touched $62 earlier for a 4.2 percent advance, the biggest intraday gain since Aug. 12.

The twin-engine 787 is Chicago-based Boeing's best-selling new jet ever, with 821 orders from 56 customers. Boeing is working to boost output to 10 a month by the end of 2013, a record for wide-body aircraft, after the setbacks increased costs, sent 787 inventory ballooning to $16.2 billion through June and upset airlines' timetables for adding new routes.

“Boeing is now in the position of demonstrating that it can begin the ramp-up,” Howard Rubel, a Jefferies & Co. analyst in New York, said in a note to investors. “We figure Boeing can deliver eight to 12 planes prior to year-end.”

The Dreamliner is part of Boeing's strategy to help reclaim the top spot in industry sales lost to Airbus SAS in 2003. The composite body is lighter than traditional aluminum, cutting fuel use, and upgrades such as LED lighting and larger windows are designed to improve passengers' in-flight experience.

Seven Postponements

Struggles with the composite materials and manufacturing process pushed back the jet's entry into service seven times since 2007. Tokyo-based All Nippon has worked with Boeing to receive 767s and 777s to blunt the effect of not getting the 787 in May 2008 as planned.

“Thank you for waiting for this day,” Boeing Chief Executive Officer Jim McNerney said in Japanese to All Nippon President Shinichiro Ito at the planemaker's wide-body jet plant in Everett.

All Nippon will start using the jets on shorter routes within Japan, because the first ones are overweight and not as fuel-efficient, according to Satoru Fujiki, the airline's senior vice president for the Americas. The carrier has 55 787s on order, which would make it the biggest operator of the plane.

First Flights

The first passenger flight will be on Oct. 26 as a special trip between Tokyo and Hong Kong. Regular domestic service will start Nov. 1 between Haneda and Okayama and Hiroshima, followed by intercontinental service between Haneda and Frankfurt in January after the carrier receives several more of the planes.

The Dreamliner is Boeing's first new jet in 16 years, after the 777, the planemaker's biggest twin-engine aircraft. The company doesn't expect to develop another new plane until next decade, after deciding in July to upgrade the engines on the 737 instead of building a replacement jet.

“Although we see profitability on the overall 787 program as relatively far off, we expect deliveries to result in a substantial decrease in 787 inventory and a correspondingly large increase in cash flow from operations in ‘12,'' Richard Tortoriello, a Standard & Poor's equity analyst in New York, said today in a note.

He recommends buying Boeing shares, as does Rubel, the Jefferies analyst.

Boeing has promoted the 787 as being 20 percent cheaper to operate than comparably sized jets, due to the lightweight materials and an new all-electric system. The plane, which seats 210 to 290 people, is being marketed for long-haul routes such as Tokyo-New York that have been the domain of larger aircraft.

‘Biggest Challenges'

‘‘This airplane is positioned to capitalize on one of the biggest challenges in aviation -- the operating cost of fuel and maintenance,'' Scott Fancher, the Boeing 787 chief, said yesterday. ‘‘This is positioned to challenge those head-on.''

The 787's new Rolls-Royce Holdings Plc engine, an option along with a General Electric Co. model, collects data every few seconds and transmits it so parts can be waiting for any repairs at the plane's next stop, according to the London-based manufacturer.

Boeing drew from a decade of research by psychologists and architects to make air travel more comfortable for passengers with the 787.

The bigger windows feature dimming glass that replaces window shades; bigger luggage bins that still allow for more headroom; and LED lighting that highlights new archways. Because plastics don't corrode like metals, cabin air can have more humidity and be kept at a higher pressure, so travelers feel they're at a lower altitude than on other planes.

Boeing will continue to refine the 787's interior, according to Kent Craver, regional director of passenger satisfaction and revenue for Boeing.

‘‘This is going to be the new baseline for all future airplanes,” Craver said yesterday.