In the same week that Boeing’s most fuel efficient Dreamliner 787 took to the skies for the first time, a new aviation tax plan surfaced as a way to break the deadlock at the Copenhagen talks by raising billions of dollars to help poor countries cope with climate change.

Wall Street Journal’s Peter Sanders reports:

EVERETT, Wash.—Boeing Co.’s 787 Dreamliner on Tuesday made its first flight, marking a success for the company after two years of delays but setting up an equally challenging drive to churn out large numbers of the cutting-edge aircraft.

Thousands of spectators gathered under cloudy skies at Paine Field here, cheering as the blue-and-white-striped jet lifted off the runway for its maiden flight. “It’s great to finally get the plane in the air,” said Boeing Chairman and Chief Executive Jim McNerney.

But the repeated setbacks have pushed the company into a tight spot: Now it must quickly turn a cutting-edge prototype into a mass-produced money maker.

“Ramping up production certainly will be a challenge,” said Mr. McNerney. Boeing hopes to produce seven Dreamliners a month by 2011, increasing to 10 a month by 2013.

The company’s ability to achieve that goal will have a huge impact on the commercial-aviation industry world-wide.

The Dreamliner’s more than 300 global suppliers won’t begin to fully recoup their money until the planes are delivered to customers.

Many suppliers have already been squeezed by past delays. And airlines and leasing firms, which have ordered 865 of the aircraft, are counting on Boeing to make its new production target so they can plan routes and service.

The delays have already caused Boeing—the single largest exporter from the U.S. and long a symbol of American engineering prowess—to bleed cash. The Chicago-based aerospace giant swung to a $1.6 billion third-quarter loss after posting a $3.5 billion write-down attributed to problems with the Dreamliner and another jetliner program. The missed delivery dates have set off payments of millions in penalties and dented the company’s credibility with customers and investors.

More interactive graphics and photos Boeing has staked much of its future on the pioneering aircraft. It is the first-ever commercial jet to be built half out of strong-but-lightweight carbon-fiber composite material, which the company promises will make the Dreamliner more fuel-efficient and durable than current models. That prospect played well with customers.

The plane, with a list price of more than $160 million, has received more orders ahead of its first flight than for any jetliner in history.

By any measure, even Boeing’s seven-planes-a-month production target is ambitious. After 14 years of producing the larger, aluminum-shelled 777 model, Boeing only this year got on track to deliver more than seven of that aircraft a month.

On top of that, the 787 marks the first time that Boeing is trying to manufacture an aircraft made largely out of composite material, the novelty of which has already led to glitches. Boeing in June abruptly postponed what was supposed to be the first flight, disclosing that composites around where the wings meet the main fuselage were damaged. It took nearly six months to fix the problem.

The Dreamliner also must run through an elaborate test-flight program before the Federal Aviation Administration will clear the aircraft to carry passengers. In a sign of the challenges involved, Boeing shortened the planned four-hour flight by an hour because of bad weather.

From the Dreamliner’s conception early this decade, Boeing planned to keep customization to a minimum “to make sure it wasn’t a boutique plane,” said James Albaugh, the head of the company’s commercial-aircraft unit. The company now is intensely focused on “what it’s going to take to ramp our production up.”

When Boeing set out to build the Dreamliner, it chose to outsource much of the production to firms based as far away as Italy and Japan.

But Boeing had a hard time keeping on top of such a vast network of suppliers. In addition, the many delays strained its relations with some key suppliers.

“The critical issue is not that Boeing isn’t going to have a successful flight test,” Marshall Larsen, CEO of supplier Goodrich Corp., said earlier this year. “It’s that the Goodriches of the world successfully support Boeing in getting the aircraft into service.” Goodrich, based in Charlotte, N.C., produces major elements of the Dreamliner and the A380, including the 787′s brakes and thrust reversers.

“We really have to focus on making sure we have a supply chain that delivers on what we promised,” Mr. Albaugh said. “We know there are going to be changes along the way, and we just have to make sure we minimize disruptions on the factory floor.”

One of Boeing’s key 787 suppliers, Spirit AeroSystems Holdings Inc. of Wichita, Kan., said it is eager finally to increase production after years of fits and starts.

“We’re really excited to get past first flight and get to the next phase and really get into production,” said Spirit spokeswoman Deborah Gann. “We’re looking forward to getting more regularity with the 787 and think there are lots of improvements on that process that we can continue to make.”

Source: www.online.wsj.com

Lenore Taylor and Peter Wilson From: The Australian December 17, 2009

AFRICAN nations, led by Ethiopia and backed by France and Britain, have presented a plan to break the deadlock at the Copenhagen talks by raising billions of dollars to help poor countries cope with climate change through levies on international aviation and shipping and possibly even a controversial global financial tax.

Kevin Rudd discussed the plan with Ethiopian Prime Minister Meles Zenawi and British Prime Minister Gordon Brown soon after his arrival in Copenhagen. Mr Brown, along with French President Nicolas Sarkozy, is backing the Ethiopian scheme, although the financial tax proposal was last night meeting resistance from other developed countries.

A spokesman for Mr Brown said London supported the Ethiopian proposal and hoped it could “provide a way forward” for the struggling climate change talks.

British Cabinet Secretary for Climate Change Ed Miliband told The Australian that much would depend on how the Ethiopian proposal was received in Copenhagen today. “It’s important to see its reception today,” Mr Miliband said.

World Vision chief executive the Reverend Tim Costello said it was “the first serious breakthrough from the entrenched blocs and set positions”.

“This is the first time a country from the north and a country from the south have shown a way to address financing, which is a showstopper here in Copenhagen, especially if developed-nation emission-reduction commitments remain weak,” Mr Costello said.

Signs of a breakthrough came as the Australian government’s project of trying to make coal less polluting by capturing and storing its carbon emissions was dealt an expensive blow at the climate summit.

The UN conference refused to include clean coal technology in its main program for channelling money to clean fuel projects, locking carbon capture and storage out of potentially billions of dollars of funding.

The Copenhagen talks are in need of a breakthrough, with formal official-level negotiations ending in confusion and anger late yesterday when a final text was pushed through, despite objections from both the US and developing countries.

More than 100 arrests were made last night (AEDT) as about 3000 protesters massed outside the conference centre.

The Prime Minister warned there were “no guarantees of success” and that getting rich and poor nations to sign on to agreements was the key. “In the past, this has primarily been a debate about what happens with the developed world,” Mr Rudd said.

“We know that the developed world is responsible for the largest slice of accumulated greenhouse gas emissions in the atmosphere . . . the biggest contributors to greenhouse gas emissions in the future will be the major developing countries, led by China.

“China already – as of today – is the world’s largest polluter. It’s now bigger than the United States. For the first time in history, there is the prospect of an agreement which brings in the developing countries, for the first time.”

Developing countries are demanding more than $100 billion a year to help cope with the effects of global warming and reduce their own emissions but the UN has so far only secured informal backing for an initial $10bn-a-year “start- up” fund for the next three years and has received firm pledges for only a fraction of that amount.

The financing plan proposes to raise $80bn a year after the three-year “fast-start” program expires, rising to $160bn a year by 2020, through levies on international shipping and aviation and possibly a financial transaction tax such as the Tobin tax on global financial transactions, although the Tobin tax idea has been rejected by the US, Canada, Russia and the International Monetary Fund.

The broad plan was also discussed at a special summit of European Union leaders over the weekend, but the fact that it is being presented by Ethiopia could help overcome developing-nation suspicions and encourage major developing-country emitters such as China and India to promise internationally binding emission reductions. Mr Meles announced his proposal at the high-level segment of yesterday’s meeting, saying he knew its funding was not as ambitious as some African countries would have liked.

“I know my proposal will disappoint some Africans . . . It scales back the ambition in return for more reliable funding and a seat at the table in the management of any such funding,” he said. “Because we have more to lose than others, we have to be more flexible than others and go the extra mile . . . Such flexibility should not be confused with desperation.”

Mr Brown said Mr Meles’s proposals were a “framework within which developed and developing countries can work together”.

So far, Japan has reportedly offered $11bn a year for the “fast-start” financing fund, and the EU about $10.5bn. The US and Australia have promised to contribute their “fair share”, without specifying amounts.

Under the Ethiopian and French plan, 40 per cent of the fast-start money would go to Africa and 20 per cent would be used to stop deforestation in developing countries. Details would be worked out by a group of developed and developing countries to report to the next G20 meeting. The fund would concentrate on “poor and vulnerable countries, particularly in Africa, least developed countries, small island states and other developing countries with a low per-capita income”.

The chief executive of Australian think tank the Climate Institute, John Connor, said last night it was good the negotiations were being handed over to politicians. He attacked some negotiators for their criticism of Australia and other countries. “While there are some legitimate concerns for developing countries, some of the negotiators are using a tax on Australia and other developed countries to avoid scrutiny of their own actions,” he said.

Source: www.theaustralian.com.au