Boeing announced today what outside experts have been saying for weeks: the company's innovative 787 Dreamliner is encountering so many issues that deliveries will be delayed.

The company said the first commercially operational Dreamliner will be delivered to launch customer All Nippon Airways in November or December next year instead of May.

"We are disappointed over the schedule changes that we are announcing today," said Boeing Chairman, President and Chief Executive Officer Jim McNerney. "Notwithstanding the challenges that we are experiencing in bringing forward this game-changing product, we remain confident in the design of the 787, and in the fundamental innovation and technologies that underpin it."

Until today Boeing had made a brave effort to assure its customers and the public that despite complications it would deliver the 787 on its original schedule.

But with the first example of the plane still lacking complete wiring and plumbing in the company's Everett factory, Boeing decided to give itself more time to work out the kinks before delivering the plane.

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"The news is not really surprising," said aerospace analyst Scott Hamilton. "Most of us have been saying for weeks that there would be a delay."

The company originally had said the first 787 would fly in August, then September. Last month it delayed the first flight to November or December but kept holding to its May delivery date. The first flight is now delayed until the end of the first quarter of 2008.

That left the company only five or six months to test the plane and get the FAA to certify it for commercial service. That's less than half the time it normally takes to test a new plane.

Boeing said the delay won't have any material effect on its financial projections.

The Teal Group's Richard Aboulafia, while giving Boieng credit for biting the bullet and implementing the delay, wondered whether the company could deliver on its promise to keep its original production schedule largely intact.

The company said that despite the delay, it plans to deliver 109 planes total in 2008 and 2009, just three short of its original goal of 112.

Aboulafia said he suspects Boeing will fall short of that new goal.

Wall Street punished Boeing for the delay. The company's stock dropped $2.77 a share or 2.73 percent Wednesday.

Though the company claimed the earnings effect will be minimal, the delay was a difficult pill to swallow particularly in light of the problems that its rival had delivering its newest plane, the A380 superjumbo. Airbus will deliver the first of those planes this month to Singapore Airlines, two years behind schedule.

The delay is a testament to just what a big change the 787 is from planes Boeing or any other aerospace company has built before.

* The aircraft is made largely of composites. That new material required the creation of new production methods, new repair methods and new plants to build it.

* Boeing changed its whole production model in building the Dreamliner. For the first time, the company farmed out both major production and design responsibilities to partner companies in Japan, Italy and other locations in the U.S. Many of those companies built new plants and hired new workers to build their parts of the 787.

* Besides composite construction, the 787 employs other emerging technologies glitches in any of which can delay the program. The flight control software for the plane, for instance, is still not done.

* The 787's introduction comes at a time when the industrial infrastructure supporting the aerospace industry is strained to breaking. After closing down facilities when aircraft orders headed for the cellar after 9-11, a huge number of new orders has now put pressure on the aircraft production supply line. Aerospace fastners, for instance, are in short supply.

Boeing and Airbus are both producing aircraft at brisk rates and are pushing to increase those rates to keep up with orders from emerging markets. Both aircraft makers have seen record order years in 2005 and 2006. This year is headed in that same direction.

Boeing said the company wants to deliver an aircraft that meets customers' performance expectations even if it means a delay.

"The most important commitment we've made to our customers is to deliver an airplane that performs to their expectations over the long life of the program. These changes to our schedule will help ensure we do just that," Boeing Commercial Airplanes President Scott Carson said.