FILE PHOTO OF THE BOEING 787 DREAMLINER

ATLANTA/NEW YORK, Aug. 29 (Reuters) – Boeing Co. said its 787 Dreamliner would finally make its first flight by the end of this year, with initial delivery expected in the fourth quarter of 2010, and its shares shot up 8 percent.

''There was a lot of uncertainty, and a lot of the chatter on the street was 'Would this aircraft ever fly?''' he said. ''It sort of ends the uncertainty.''

Boeing, the No.2 plane maker behind EADS unit Airbus, said it expects its 787 program to be profitable eventually, but also plans to take a third-quarter charge to write off the cost of the first three test-flight planes, which it says have no commercial value because of extensive modifications.

The date of the first test flight has been put off repeatedly because of production problems and a two-month labour strike, hurting Boeing's credibility as it grapples with the commercial aerospace slump.

The latest delay was in June, when Boeing said the plane would not fly as scheduled during the second quarter so it could reinforce a side-of-body section.

The June delay was the 787 project's fifth, with the first coming in 2007.

''Risk remains the new schedule could slip given the current challenge of re-fitting the wing-body join, the possibility of changes to the electrical and environmental control systems and simply the poor 787 track record,'' Credit Suisse analyst Robert Spingarn said in a note to clients.

Boeing told analysts on a conference call that it had ''a high degree of confidence'' in the fix for the structural problem that caused the latest 787 delay, and had done a thorough analysis.

The third-quarter charge will be a result of reclassifying costs from the first three test planes as research-and-development expenses versus programme inventory. The change will create an estimated non-cash pretax charge of $2.5 billion, or $2.21 a share, against third-quarter results.

Analysts were expecting a profit of $1.21 a share for the third quarter, according to Reuters Estimates.

''This is money that was already spent and this is money that they're reclassifying as an R&D expense ... The message should be clear -- it's still an economically viable aircraft,'' Hamilton said.

Fitch Ratings said the 787 programme has potential long-term credit benefits if Boeing successfully executes the updated plan.

''But Fitch is still concerned about the program given that (Boeing) still needs to achieve first flight, certification, and a successful production ramp-up,'' the agency wrote.