CHICAGO -- The Boeing Co. will start assembling the first 787 Dreamliner in the second quarter and anticipates the passenger jet's initial test flight at the end of August, its chief financial officer said Wednesday.

James Bell told investors that Boeing continues to devote significant research and development spending to resolving weight and timing challenges with the 787, but said they were typical of a new airplane development program at this stage.

The company has received 464 firm orders for the 787 and plans to deliver 112 in the two years after the initial delivery in May 2008.

One of the jet's major selling points has been that it will use less fuel per passenger than similarly sized airplanes because of a shift to composite materials, which are lighter and more durable than aluminum.

Bell said the company has shown it can incorporate that new technology on a large scale, but substantial production risks remain when it starts ramping up manufacturing.

"Clearly, the next step will be the flight test, and how well that sorts out any of the technical issues surrounding the airplane," he told the Citigroup-sponsored conference in New York, in remarks broadcast over the Internet.

"As we look at it today, we feel pretty comfortable that's going to be on track, but obviously we have to wait until we get through it."

Banc of America Securities analyst Robert Stallard said 2007 is a crucial year for Boeing in terms of successful production of the new jet.

"Launching a new aircraft is a risky business, particularly when it comes to actually producing the product on time and on budget," he said in a note to investors.

"As we have seen with the Airbus A380, failing to meet the plan can be very damaging for both company finances and the stock price."

Boeing also said Wednesday that First Choice Airways has exercised options to order four more of the Boeing 787-8 models, bringing its total order to 12. There are three models of the 787.

First Choice, based in the United Kingdom, is a subsidiary of First Choice Holidays PLC, a leisure travel company.

No price was given for the order, which at list prices would be worth $592 million to $630 million, depending upon aircraft configuration. Airlines often negotiate discounts.

Boeing shares rose 89 cents to close at $88.71 on the New York Stock Exchange. They are down 13 cents in 2007 after rising 26 percent last year.