No question that Boeing (BA) has been going through a rough patch. The day I signed a contract to write a book about Boeing, its stock peaked at $105 and it has since bottomed out at $30, in March 2009. But recently, the stock has pulled up, and is now trading near $42. What I find most encouraging is that Boeing has faced and overcome one of the single biggest problems under its control -- the two year delay in its new aircraft, the $10 billion 787 Dreamliner program, which will offer an aircraft with 20 percent greater fuel economy and more passenger comfort.

Why does this matter? Because the roughly 900 orders that Boeing received for the 787 represent a big source of potential profit, the delay of which has hurt its revenues, profits and stock. At the core of the delay was Boeing's reliance on global suppliers for an unprecedented 70 percent of its design and production. Early on, Boeing did not monitor these suppliers well enough. This led to parts shortages and slipped delivery schedules, and a two-month employee strike also hurt things.

Now under new management within Boeing, the 787 is ready for its first flight by the end of June, saying that the "necessary structural tests required prior to first flight are now complete." But Boeing is still facing mighty headwinds. Declining demand for airplanes -- driven by a 12 percent decline in airline passenger revenue forecast for 2009 -- pushed Boeing to cut 10,000 jobs in January, and last month it announced a 28 percent production cut on its 777 wide-body jetliner. Boeing is also delaying a planned production increase on its 747-8 and 767 commercial jets.

So why be optimistic? There are 886 787 airplanes on order from 57 customers worldwide. And Boeing has a $352 billion backlog -- more than five times its 2008 revenues. Moreover, the skills it has developed to manage such a massively global product development process will be useful in the future. As Boeing develops new aircraft, it will use these skills to accelerate time to market and lower its development costs.

These benefits should keep Boeing shareholders flying right as the global economy recovers.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. Portfolio recently published his eighth book, You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in Boeing securities.


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