In the late 1990s, Boeing began considering a replacement for the 767 when sales weakened because of competition from the Airbus A330-200. As sales of the Boeing 747-400 also slowed, the company proposed two new aircraft, the Sonic Cruiser and the 747X. The Sonic Cruiser would have achieved higher speeds (approximately Mach 0.98) while burning fuel at the same rate as the existing 767. The 747X, competing with the Airbus A380, would have lengthened the 747-400 and improved efficiency by using a composite supercritical wing.
Market interest for the 747X was tepid, but the Sonic Cruiser had brighter prospects. Several major airlines in the United States, including Continental Airlines, initially showed enthusiasm for the Sonic Cruiser concept, although they also expressed concerns about the operating cost. However, by decreasing travel time they would be able to increase customer satisfaction and aircraft utilization.
The September 11, 2001 attacks upended the global airline market. Airlines could not justify large capital expenditures, and increased petroleum prices made them more interested in efficiency than speed. The worst-affected airlines, those in the United States, were considered the most likely customers of the Sonic Cruiser. Boeing offered airlines the option of using the airframe for either higher speed or increased efficiency, but the high projected airframe costs caused demand to slacken further. Then the company officially canceled the Sonic Cruiser on December 20, 2002, and switched tracks by announcing an alternative product, the 7E7, on January 29, 2003, naming the executives to run the new jetliner program.
The replacement for the Sonic Cruiser project was dubbed the "7E7" (with a development code name of "Y2"). The "E" was said to stand for various things, depending upon the audience. To some, it stood for "efficiency", to others it stood for "environmentally friendly". In the end, Boeing claimed it merely stood for "Eight", after the aircraft was eventually rechristened "787". A public naming competition was also held, for which out of 500,000 votes cast online the winning title was Dreamliner.
On April 26, 2004, the Japanese airline All Nippon Airways (ANA) became the launch customer for the 787, then known as the 7E7, by announcing a firm order for 50 aircraft with deliveries to begin in late 2008. ANA's order included 30 787-3, 290–330 seat, one-class domestic aircraft, and 20 787-8, long-haul, 210–250 seat, two-class aircraft for regional international routes such as Tokyo Narita–Beijing. The aircraft will allow ANA to open new routes to mid-sized cities not previously served, such as Denver, Montreal, and Boston.
Early concept images of the 787 included rakish cockpit windows, a dropped nose and a distinctive "shark-fin" vertical stabilizer. The final styling of the aircraft was more conservative, the fin appearing visually similar to those of aircraft currently in service. The nose and cockpit windows were also changed to a more conventional form.
The 787-3 and 787-8 were to be the initial variants, with the 787-9 entering service in 2010. Boeing initially priced the 787-8 variant at US$120 million, a low figure that surprised the industry. In 2007, the list price was $146–151.5 million for the 787-3, $157–167 million for the 787-8 and $189–200 million for the 787-9. Customer-announced orders and commitments for the 787 reached 237 aircraft during the first year of sales, with firm orders numbering 677 by the 787's premiere on July 8, 2007, and well before entry into service. This makes the 787 the fastest-selling wide-body airliner ever before entry into service.
The 787 uses the same technology proposed for the Sonic Cruiser in a more conventional configuration (see Features). Boeing claims the 787 will be near to 20% more fuel-efficient than the 767. One third of the efficiency gain will come from the engines, another third from aerodynamic improvements and the increased use of lighter weight composite materials, and the final third from advanced systems. The most notable contribution to efficiency is the new electrical architecture which replaces bleed air and hydraulic power sources with electrically powered compressors and pumps, as well as completely eliminates pneumatics and hydraulics from some subsystems (e.g., engine starters or brakes). Technology from the Sonic Cruiser and 787 will be used as part of Boeing's project to replace its entire airliner product line, an endeavor called the Yellowstone Project (of which the 787 is the first stage).
Boeing selected two engine types, the General Electric GEnx and Rolls-Royce Trent 1000, to power the 787, both placed in pods. Significantly, this leaves Pratt & Whitney, which normally has an entrant in the market, unable to offer one of its engines to 787 customers. According to United Technologies Corporation CEO George David, Pratt & Whitney "couldn't make the business case work for that engine." For the first time in commercial aviation, both engine types will have a standard interface with the aircraft, allowing any 787 to be fitted with either a GE or Rolls-Royce engine at any time. Engine interchangeability makes the 787 a more flexible asset to airlines, allowing them to change easily from one manufacturer's engine to the other's if required. The engine market for the 787 is estimated at US$40 billion over the next 25 years. The launch engine for all three current 787 variants is the Rolls-Royce Trent 1000. Airbus has offered the competing A350 powered by a development of the Rolls Royce Trent turbofan, the Trent XWB.
John Leahy, an executive from Boeing's rival Airbus, openly criticized Boeing's large-scale use of composites in the 787's fuselage as being "rushed and ridiculous". Boeing built and tested the first composite section while examining the Sonic Cruiser concept nearly five years before, making the 787 a significantly refined product.
The 787 underwent extensive wind tunnel testing at Boeing's Transonic Wind Tunnel, QinetiQ's five-meter wind tunnel at Farnborough, UK, and NASA Ames Research Center's wind tunnel, as well as at the French aerodynamics research agency, ONERA.
After stiff competition, Boeing announced on December 16, 2003, that the 787 would be assembled in its factory in Everett, Washington. Instead of building the complete aircraft from the ground up in the traditional manner, final assembly employs just 800 to 1,200 people to join completed subassemblies and to integrate systems. Boeing has assigned its subcontractors to do more assembly themselves and deliver completed subassemblies to Boeing. Boeing would then perform final assembly. This approach results in a leaner and simpler assembly line and lower inventory.
Boeing has previously shipped 737 fuselage barrel sections by rail from Spirit AeroSystems' Wichita, Kansas, facility to Boeing's narrow-body final assembly plant in Renton, Washington. As the major 787 components have many systems pre-installed before delivery to Everett, final assembly time is reduced to three days. This is less than a quarter of the time traditionally needed for Boeing's final assembly process. In order to speed delivery of the 787's major components, Boeing has modified three 747s purchased from Chinese and Taiwanese airlines. Called Dreamlifters, these widened airplanes can house the wings and fuselage of the 787 as well as other smaller parts.
On December 12, 2009 the first 787 completed high speed taxi tests, including post-rotation takeoff abort, the last major step before flight. Boeing conducted the 787-8's first flight on December 15, 2009, originating from Snohomish County Airport in Everett, Washington at 10:27 am PST, and landing at Boeing Field in King County, Washington at 1:35 pm PST. Originally scheduled for four hours, the test flight was shortened to three hours due to bad weather.