Boeing Company is on track to deliver its first 787 Dreamliner, which will compete with Airbus's A380 jet, the company's head of commercial airplanes said late on Saturday.

Boeing is due to deliver the first 787 to All Nippon Airways by the end of this year. "Testing is going well. If there are no unexpected discoveries, we'll be on track," said James Albaugh, president and chief executive of Boeing Commercial Airplanes on the sidelines of an event.

Production of the carbon-composite airplane was delayed five times in three years, and the first flight was postponed six times, due to a shortage of bolts, faulty design and a two-month strike at its factory.

Some market experts have said the delivery schedule for the Dreamliner, which made its first test flight in December after two years of delays, is too ambitious. Boeing has already received more than 850 orders for the plane.

Boeing and rival Airbus were dogged in 2009 by fewer orders for planes as carriers around the world grappled with falling travel demand in a sagging economy. But a recovering economy and brighter outlook for airlines point to a stronger 2010.

Boeing shares have rallied about 26 per cent this year on expectations of a commercial rebound.

The company reported a higher-than-expected first-quarter profit despite making fewer deliveries as it held down costs at its commercial airplane division.

EADS's shares have meanwhile eased 3.8 per cent on persistent cost problems on the A380 aircraft as well as concern that the company could be hit with additional costs related to the delayed A400M military transport plane.

Commenting on the planned merger of United Airlines parent UAL and Continental Airlines, which will create the world's biggest airline, Albaugh said he expected the carriers to profit from the deal.

He sidestepped a question on whether the two airlines could cancel some outstanding aircraft orders as a result of the merger, saying only that he had sent the companies congratulatory notes via e-mail.

The merger was expected to trigger a scramble between Boeing and Airbus, as well as engine makers, over the fate of almost $22 billion in outstanding plane orders and control of any future fleet replacement decisions.

Both Continental and United have order for Boeing planes, including 35 single-aisle 737s and 50 Dreamliners. "I expect they will rationalise their fleets," Albaugh said, without being more specific.

Albaugh also said Boeing still plans to announce in June whether it will increase production of its 737 single-aisle plane from its current rate of 31 planes per month.  The company has not yet said by how much it would raise the production rate.-Reuters