Boeing (BA) has orders for 850 Dreamliner 787's worth $110 billion, according to The New York Times. That's an impressive feat. But there's one little problem: Boeing can't seem to get a single one off the ground, and its customers have been waiting two years for delivery. That's a shame for Boeing investors who have watched its stock lose half its value since its 2007 peak.

After six delays, Boeing is trying to convince the public that it has everything under control now. To do that, it has shuttled reporters from The New York Times and The Wall Street Journal to its so-called Production Integration Center, hoping they'll be wowed by the 24 big screens and the high-definition handheld cameras that can peer into the operations of the 787's suppliers all around the world.

The Times got wheeled out to Boeing last month and returned with a piece that was similar to the Journal's. It started off with a description of Boeing's whiz-bang assembly process, an impressive system but not one it had originally planned on doing. The reason is that when Boeing first conceived of the 787, it planned to let suppliers build all the components and deliver them to Everett, Wash., where Boeing would "snap them together." To be fair, the Times did more reporting than the Journal -- talking with analysts and providing a more detailed history of the problems.

Having missed six deadlines for delivering the Dreamliner, Boeing apparently thinks reporters will be impressed by the high-tech PIC and avoid asking uncomfortable technical questions about the problems that I discussed in August with the 787's electrical system, environmental control system, the area where the wing attaches to the fuselage, and so-called surface wrinkling.

These are among the many reasons for the 787's production setbacks. But beyond them, none is more significant than Boeing's post-9/11 worry about taking on the full $10 billion financial risk for designing and building it. So Boeing altered its approach, asking suppliers all around the world to design and build the aircraft's components. This would shift the financial risk from Boeing's books to those of its suppliers.

Ultimately, however, the 787 will either pass inspection and go into service by the end of 2010, according to the latest schedule -- or it will get delayed again. Trying to spin the two biggest newspapers in New York won't make those planes fly if Boeing can't solve the 787's technical problems.

Peter Cohan is a management consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on Twitter. He has no financial interest in the securities mentioned


Increase your money and finance knowledge from home

What is Short Selling?

Make a profit when stocks prices fall.

View Course »

Asset Allocation

Learn the most important step in structuring an investment portfolio.

View Course »

Add a Comment

*0 / 3000 Character Maximum