Boeing's Rebound at Stake as 787 Takes Wing

Boeing Co.'s delayed 787 Dreamliner, scheduled to take flight for the first time tomorrow, may encounter more turbulence during at least nine months of testing if history is a guide.

Originally meant to fly in August 2007 and reach customers in May 2008, Boeing (BA) delayed the plane five times because of unexpected hurdles with new composite plastics and an outsourced supply chain that stretched to 135 sites around the world.

The novelty of the plastics adds another layer of complexity to Boeing's flight-test program, which in the past has turned up its own set of surprises, according to former Boeing test pilots and aerospace industry consultants.

"The model is about 20 percent—there's about 20 percent more work than what you plan for," said Jerry Whites, a test pilot who retired this year. "You always find something. If something totally unexpected happens, the saying around here is, 'Well, now we've got a flight-test program.'"

The next round of scrutiny may put pressure on the shares, which have rallied by more than a third since a fifth delay was announced in June. Boeing plans to deliver the first plane in 2010's fourth quarter to Tokyo-based All Nippon Airways Co.

"If they have any glitches, they will hurt the share price," said Wolfgang Demisch, a partner at Demisch Associates LLC, an aerospace financial consultant in New York. "Success is essentially priced in at this point, and any sort of further hint at trouble would be unfortunate."

It's normal to find problems at this stage, said Jim Proulx, a spokesman for Chicago-based Boeing.

"Flight test is just that: testing," Proulx said. "We expect that we will find and identify issues, and we build time into our schedule to deal with issues as we find them."

Testing ProgramsAs a former test pilot, Whites knows the value of identifying an aircraft's limits and capabilities in flight long before anyone else buckles in. He was testing the rudder pedals of an E-6A jet in 1989, seven months after the same routine caused a broken tail and a near-catastrophe, when the plane shook and he heard a voice in his headset.

"Whoa, whoa, whoa," called the pilot assigned to fly behind him, watching as a third of the test plane's tail snapped off, Whites recalled. He wrestled the plane down again, and engineers later redesigned the rudder power control unit. Successful 787 flights would help validate both a new model and a new way of building aircraft. The 787 is the first airliner made mostly from composite plastics, rather than aluminum, to reduce fuel consumption. It's Boeing's fastest- selling model, with 840 orders valued at about $140 billion at list prices.

Getting the plane in the air may benefit both Boeing shares and the broader aerospace industry, Rob Stallard, a New York- based analyst at Macquarie Capital Inc., wrote in a Dec. 11 note to clients. Even so, there's a risk that initially some investors will "buy on the rumour, sell on the news," he said.

Boeing PerformanceBoeing, the No. 2 commercial planemaker after Airbus SAS of Toulouse, France, rose 59 cents to $55.60 on Dec. 11 in New York Stock Exchange trading. While the stock remains about 45 percent below its price before the first delay in October 2007, Boeing has rallied since June on speculation that the plane's problems are behind it.

"Some of this expectation regarding first flight is probably priced into the stock, but we think that there is probably some way to go," said Stallard, who raised his Boeing target price to $60 from $53.

The 787 completed high-speed taxi tests over the weekend and Boeing says the plane will take off tomorrow at 10 a.m. Pacific time from Paine Field next to the Boeing factory in Everett, Washington, weather permitting. The commander is to be Mike Carriker, a former U.S. Navy flier who also taught at the U.K.'s Empire Test Pilots' School in Boscombe Down, England.

Battery of TestsIf that flight goes well, Boeing expects to run six airplanes through a battery of tests under various conditions, from freezing temperatures to high winds.

Advances in computer modeling software make it more likely that major issues with the 787 already have been discovered, said Hans Weber, chief executive of Tecop International Inc., a San Diego-based consultant. Still, so many new materials are involved that bugs probably will crop up, he said.

"Don't let us forget—whenever you introduce new technology, it never goes smoothly," Weber said.

Boeing found issues with both the 737 and 747 in flight tests, said Brien Wygle, a former Boeing test pilot. He was at the controls for the 737's first flight in 1967 and co-pilot for the 747's in 1969.

Landing Gear 'Shimmied'The landing gear on the 737 "shimmied very badly," Wygle said. "And our reversers were ineffective; we had to redesign the reversers. They were just things that had to be fixed if you wanted to put the airplane on the market."

An hour after the 747 took off from Paine Field, there was a bang when the pilots moved the wing flaps, Wygle recalled. They cut the flight short. It was a minor engineering fix to redesign the flaps, he said. Later, more pressing issues emerged. The plane was overweight and the engines weren't reliable, he said.

"It was a tough program, but the facts were that we delivered the first airplane on schedule," said Wygle, 85, adding that the 787's delays surprised him. "Decade after decade, we delivered on schedule—not always on budget."

When Whites had his mayday moment in the E-6A, he was in "the absolute last test plane to be flown," he said. The Navy started taking delivery that same year. "What we do in flight test is verification of computer modeling," said Whites, 63. "And they're usually pretty accurate. But if they were 100 percent accurate, you'd build the airplane, put a ribbon on it, shove it out the door and say, 'Mr. United, enjoy your airplane.'"

Before it's here, it's on the Bloomberg Terminal.