Boeing announces fifth 787 delay

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Things are getting embarrassing for Boeing (BA) CEO Jim McNerney. That's because after announcing four delays to its highly touted aircraft, the 787 Dreamliner, Boeing just announced a new delay -- making this the fifth.

Should heads roll at Boeing as a result of this embarrassment? Or is the delay just a prudent response to design flaws discovered during development?

Boeing had maintained that the first flight of the long-delayed next generation aircraft would take place by the end of June. The 787 is already two years behind schedule. This morning it announced that an area within the 787's side-of-body section needs to be reinforced. And Boeing says it will be several weeks before it will release a new flight and delivery schedule.

The 787 remains Boeing's fastest-selling model, with 865 orders. That's because the 250-seat Dreamliner is the first airliner to have a fuselage and wings built of composite plastic, making it lighter than traditional aluminum planes, and its extensive electrical system will help save on fuel.

But Boeing has had huge problems delivering on that promise. It initially intended to deliver the 787 in late 2007 but it outsourced most of the design and manufacturing to companies around the world. And Boeing did not supervise these suppliers aggressively enough.

Boeing has explained previous delays as coming from parts shortages, defects, redesign work and problems with suppliers. The fourth delay was blamed on a 58-day machinist strike. And during the two-year delay in the 787's development, rival Airbus SAS has gained ground with 483 orders for its competing A350 model airplane, which will now enter service three years after the Dreamliner.

Boeing has already replaced management of the 787 program once. Pat Shanahan now heads a group controlling all Boeing's commercial plane production programs, taking over from the 787's original general manager, Mike Bair, in October 2007.

With Boeing stock down 6.3 percent in early trading, Boeing's board must be wondering whether it's time for more heads to roll.

Peter Cohan is president ofPeter S. Cohan & Associates. He alsoteaches management at Babson College. His eighth book isYou Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.

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