Boeing and its partners have made a lot of progress toward getting the 787 on track, says Pat Shanahan. "We simply haven't made enough."

As a result, the company is pushing back its timetable for first flight and first deliveries by two quarters, the 787 program chief told reporters and analysts this morning.

Boeing now plans the first flight - originally set for late August 2007 - will take place in the fourth quarter of this year. Deliveries will start in third-quarter 2009, about 18 months later than planned.

It's the third announced delay for the 787 program, which was supposed to have been delivering airplanes by now, had the company and its suppliers been able to keep to the initial schedule . But Shanahan and Commercial Airplanes chief Scott Carson assured reporters and analysts that this time, they really do see light at the end of the tunnel.

"There are no technical inventions needed here, it's a matter of burning through the work," Shanahan said. Are you finally at the bottom of the barrel, with no more big surprises to find, a reporter asked? "It feels that way," he replied.

This morning's announcement was not a surprise. Wall Street has been pressing Boeing to come clean and confess that the program has slipped even farther behind schedule. Rather than punish the company, the stock market reacted favorably this morning, with Boeing shares rising on the news.

"It's certainly a credible schedule if nothing else goes wrong," analyst Myles Walton with Oppenheimer told Bloomberg.

Carson and Shanahan made a great effort to assure the analysts that nothing else will go wrong, ticking off long checklists that of work that's been completed or nearly so, such as getting 98 percent of the 7 million lines of computer code on the plane installed, tested and confirmed.

Most on-board systems have been successfully checked, and composite fuselage pieces have held up even better than expected in strength tests, Shanahan said, to the point that the company "had to stop the test because we were concerned we would break the test vessel before the barrel."

The biggest hurdles have been cleared, he said. "When we look at the balance of tests to go, our judgment is they are low-risk"

Recently reported problems with the center wing box were fairly easy to fix, Shanahan said, requiring simply the installation of more reinforcing. However, it was a serious setback, because working on the first plane's center wing box delayed work on the wiring that passes through that part of the plane.

The biggest challenge ahead is ensuring the supply chain can deliver. "That's the untested part of this production model," Shanahan said.

The problem for suppliers has been "how do you make the transition from initial development into a serious production environment?" Carson said. "We've put senior experienced people from our operation into those operations to assist them in those transitions." Boeing people are working with key suppliers, and in some keys the supplier's suppliers, he added.

The issue is not just delivering the parts for the first planes, but ramping up production so that Boeing can start delivering 787s in volume. Carson said the goal is to be delivering 10 a month by 2012, which will be a key milestone, because at that rate, Boeing will start recovering ground lost to the initial delays.

That's a slower ramp-up than initially envisioned - Boeing had talked of hitting those rates within about two years, not three - but it's a schedule built around the capabilities of the weakest links in the supply chain, Carson said.

Boeing's decision to buy out supplier Vought Aircraft Industries' share of a South Carolina pre-assembly plant - Global Aeronautica - will give the company more control over the work that's done there, and also will free Vought from what had become a "distraction" from its primary mission of building 787 parts, Carson said.

Carson didn't address questions whether Boeing's going to make more cash payments to suppliers, like the $124 million transfer Spirit AeroSystems in Wichita says it's getting from Boeing. He did say that Boeing plans to spend more on R&D this year, but that shouldn't affect 2008 earnings.

He acknowledged that talks are underway with customers about compensation for late deliveries, but didn't attempt to calculate how much that will cost the company.

Carson said Boeing still "believes in this game-changing airplane. I believe," he added, "in the team that will deliver this airplane to our customers"

Compared to pervious calls, where combative analysts grilled Boeing executives about the 787 schedule, today's call had a kindly tone. "When are you going to stop working 20 hours a day, Pat?" one Wall Street veteran asked Shanahan. "We're all rooting for you," added another.