Oct. 20--By Seattle Times business staff

Boeing shares fell 2.9 percent Tuesday after a Morgan Stanley analyst raised concerns that the 787 Dreamliner's first flight will be delayed into 2010.

Analyst Heidi Wood cut Boeing's rating from "equal weight" to "underweight," essentially a sell recommendation, and cut the stock price target to $43 from $50. Boeing shares closed down $1.56 at $51.89 Tuesday, after falling as low as $51.07 earlier in the session.

The plane's latest hitch, revealed this summer, came after stress tests revealed a structural flaw where the upper wing joins the side of the airplane's fuselage. Since then the company has repeatedly said it expects the plane to make its first flight by year-end.

The Morgan Stanley analyst wrote that beyond first flight, she is "even more concerned first delivery could be 6 months delayed to Spring 2011."

"We would not be surprised to see delayed first delivery and program ramp given scope of redesigns, weight overruns, high fuel burn, and high manufacturing costs," she added.

If that occurs, the "787-8 may fall short of contractual guarantees, entitling airlines to remuneration," Wood wrote.

The analyst also cited risk of a longer-than-expected downturn in airplane orders, and a less profitable mix of airplanes, as reasons for cutting her estimate of Boeing's 2010 profit to $3.85 per share, from $4.50.

Boeing is scheduled to report its quarterly results Wednesday morning, and a status report on the 787 is expected.

Last Friday, Scott Fancher, vice president and general manager of the 787 Dreamliner program, said on the Boeing website that "we continue to be on track to fly the 787 by the end of the year."

"The design of the side-of-body solution is on track. Installations of the fittings are proceeding well and we are pleased with the progress we are making on this important effort," his statement said.

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