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Boeing boosts Dreamliner production plans

After a rocky 2013 that included a grounding of the 787 and a slew of questions about the safety of the plane, Boeing is raising production plans for the Dreamliner. The company, which has delivered 96 Dreamliners to 16 customers, now plans to increase the number of 787s it will build and deliver by 2016 and 2020.

A Boeing 787 Dreamliner being built in Everett, Wash.
Source: Boeing Co.
A Boeing 787 Dreamliner being built in Everett, Wash.

During a conference call with analysts, Boeing Chairman and CEO Jim McNerney said he is pleased with the progress of the Dreamliner program.

While Boeing is optimistic that it has passed the biggest challenges facing the 787, McNerney admitted there's more work to do. "We will not be satisfied until we meet customer expectations across the board."

787 production schedule

Current: 7/month

2014: 10/month

2016: 12/month

2020: 14/month

Raising 787 reliability

While Boeing is moving forward with plans to raise Dreamliner production, the company is still wrestling with problems that are creating headaches for those airlines flying the plane. For example, the dispatch reliability for Dreamliners in service was 96 percent in the third quarter. "We're not pleased yet. No. 1, we want to go higher. Second, we still have customers not at that level," said McNerney. "It's on us to help them improve."

One of the biggest issues plaguing the Dreamliner is false software messages, which cause airlines to either delay or cancel 787 flights as they check whether the warning about a particular component on the plane is signaling an actual issue or is a false message. McNerney said those false messages are nearly a third of the Dreamliner issues being raised.

"It's frustrating," he said.

It's not only frustrating, but also hurting the bottom line for some of the airlines flying the Dreamliner. In September, Norwegian Air Shuttle took one of its Dreamliners out of service for maintenance work and testing so the airline could raise the reliability of the plane.

Dreamliner profitability

Boeing said near-term costs for the 787 program will increase as the company ramps up production of the 787-10. The company has increased the program's deferred production balance by $5 billion to reach a high of $25 billion by 2015. After that, Boeing expects to bring the balance down and for the program to be cash flow positive starting in late 2015, early 2016 as Boeing increases Dreamliner deliveries.

Dreamliner backlog stands at 890 planes, with orders for the new plane starting to pick up after hitting a plateau in recent years. This year, Boeing has booked orders for 131 Dreamliners with just one cancellation.

In September, Boeing conducted the first flight of the 787-9, a larger Dreamliner which will fly further than the base model. The 787-9 accounts for more than 40 percent of the Dreamliners Boeing plans to build.

By CNBC's Phil LeBeau; Follow him on Twitter: @Lebeaucarnews