NEW YORK -- Two years behind schedule and an albatross to its stock price, the Boeing 787 program has finally inspired some confidence on Wall Street.
Late Thursday, Chicago-based Boeing Co. said it completed the first engine runs on the new wide-body jet. The 787, made of lighter material than traditional planes to improve fuel efficiency, is flown on two Rolls Royce /quotes/comstock/23s!a:rr. (UK:RR. 328.25, -2.00, -0.61%) Trent 1000 engines.
"The 787 program is making clear near-term progress toward first flight," said Joseph Nadol, an analyst with J.P. Morgan. Management's optimism regarding near-term hurdles looks palpable, and the place could be in the air before June 15.
Earlier this week, Boeing /quotes/comstock/13*!ba/quotes/nls/ba (BA 43.23, -0.06, -0.14%) reaffirmed its commitment to launch the 787 before the end of June with first deliveries occurring in next year's first quarter.
pleased with the performance on the engines during this test," said Scott Fancher, vice president and general manager of the 787 program in a release. "We will now get ready for our intermediate and final gauntlet tests."
In recent weeks, the plane completed a "rigorous series" of tests, including those to its structure, systems integrations and landing-gear.
Production risks are still likely in the long term, but first flight should nonetheless be a "cathartic event" for Boeing shares and other aerospace stocks, Nadol said in a Friday note to investors.
Nadol rates Boeing stock at neutral with a $40 price target. On Thursday, Boeing shares closed at $43.29, down about 3%.
Boeing stock got clobbered in the past year as anxiety over the global recession and falling passenger traffic demand gripped aerospace investors. Shares plunged about 64% from last year's high to a six-year low of $29.05 on March 3. Since then shares have rallied more than 40%.
The 787 will be Boeing's flagship product, eventually replacing its wildly popular 747 jumbo jet that has generated more than 1,500 orders since 1970. Even before first flight, the 787 received nearly 900 orders from 57 customers.
With the recession and recent financial crisis have come cancellations. This year, customers canceled 49 orders for the 787 while Gulf Air added eight new orders.