Is Boeing's 787 Dreamliner a pipe dream?

By Money Matters Editors

Boeing (BA) announced Wednesday that it’s chosen North Charleston, S.C. for its second plant for the next-generation 787 Dreamliner, over Seattle.

What would be even better news? Boeing announcing that the much-delayed 787 is rolling off the assembly line and is being delivered to airlines, worldwide.

To say there’s a lot riding on the 787 would be the understatement of the year.

First, this is Boeing’s first composite plane, with composite materials replacing heavier steel and aluminum components. Those lighter materials are a major reason why the 787 will be more fuel-efficient than comparable commercial jets.

However, the plane’s new type of construction, combined with a questionable, untested, out-sourced manufacturing process, have led to repeated delivery delays that have set the delivery date back 30 months. Boeing has booked more than 840 orders for the 787, but there is concern that major airlines will start to cancel/defer orders in favor of alternate planes, if it can’t make a first flight deadline by year’s end, and the start of deliveries by Q4 2010.

Not surprisingly, Wall Street has given Boeing’s shares a hair-cut: shares are down to about $47 from a high of $55 earlier in 2009, and near $70 about a year ago. The fact that institutional investors are exiting Boeing’s shares is a sign that Wall Street is losing confidence in the 787 project, and in the company’s management.

Second, Boeing is a major exporter for the United States: in other words, Boeing helps lower the U.S.’s trade deficit. The U.S. can not afford to have one of its primary value-added sectors go into the ditch. The U.S. needs all of its value-added sectors humming and creating jobs to eliminate the trade deficit and to increase GDP.

Will Boeing deliver a safe, reliable, efficient, 787 by the stated time-table of Q4 2010? Money Matters Editors hope so. If not, or if there are any more delays in the 787 program, one thing will be certain: CEO Jim McNerney and his management team will have to be removed.