Monday, October 12, 2015

Possible resolution on Ex-Im bank can free Kenya 787 for delivery

The Ex-IM bank reauthorization fiasco might now have a resolution coming in the next few weeks.  The expiration of the bank’s charter has put a crimp in deliveries of some Boeing jets to customers, notably two 787s to Kenya Airways.  Those two airplanes are in storage at Everett.  It was rumored that the carrier was working to find alternative delivery financing but I think it’s safe to say that it probably hasn’t happened.

Last week, a bi-partisan group of Congressmen were able to use what is called a discharge petition in order to get the legislation out of House Financial Services Committee that is led by a Republican who doesn’t want to see the Ex-Em Bank’s charter renewed.  I gathering 218 signatures for the discharge petition, the bipartisan group now has forced a vote that will be taken within the next three weeks.  Still the reauthorization also needs to get past the Senate so I don’t think Boeing will be removing the covers of those two 787s for Kenya just yet.

In other 787 news, Air France, which has been in deep financial turmoil, is talking about canceling part of their 787 order quite possibly the early deliveries which are expected to start late next year.  Indeed, L/N 500, a 787-9 that is being leased to Air France from AerCap is on the firing order.  Air France/KLM ordered a total of 25 787s and have a leasing agreement from AerCap for a further 12 aircraft.  Air France is to get 13 787 from Boeing with another 3 from AerCap.  The remainder are to go to KLM which, it seems, is unaffected by troubles at the parent company. The management group recently converted 6 787-9 of their 25 aircraft order to 6 787-10 though it’s not clear to which carrier the -10s will be delivered.  Given that the first 787-9 for Air France is a year from delivery it stands to reason that some of the long lead items for that aircraft and other near term 787 deliveries are already on production.  It may cost Air France more than it’s worth to cancel the order but the jury is out on that.  Interestingly, the A350-900 order remains intact, perhaps some home country favoritism playing out in this drama?  We may see Boeing sales people chasing Air France management down the street trying to rip their clothes off if the carrier goes ahead with any cancellation.

Oman Air took delivery of the first of 6 787-8 that it had ordered.  The carrier is expected to take delivery of one more this year but it seems that they won’t receive any more next year.

This week, ZD002 for Air Austral should be pulled outside of the EMC as it starts to finish up re-work and change incorporation ahead of its delivery.  It will spend about two and half weeks at the EMC before being towed to the flightline.  ZD001 (L/N 15) will takes its place inside the EMC after ZD002 is pulled outside.  Strangely, ZD006 (L/N 14) will be taken back from the EMC to the storage runway at the end of this month.

Lastly,  there are a number of number of C-1 flights coming up (about 9) over the next two weeks and I do think Boeing should be able to deliver at least 8 more 787s this month possibly 10 more depending on the Ex-Im reauthorization situation.  Boeing has already delivered 2 aircraft this month.

Thursday, October 1, 2015

787 deliveries continue to exceed guidance. 3rd quarter 2015 787 deliveries stand at 37

Monthly 787 Deliveries by Model
Deliveries of 787 continue to exceed factory output for the third month in a row as Boeing shipped 11 787s to customers versus 10 rollouts from the plants in Everett and North Charleston.  For the 3rd quarter which just ended, Boeing has delivered 37 787s versus rolling out 31 aircraft.  This means the delivery backlog is shrinking which is very good news for Boeing.  The overall program efficiency is 0.91 (10 aircraft completed versus 11 delivered).  Everett's efficiency ratio is 0.67 (6 787s rolled out versus 9 delivered).   North Charleston didn't do as well as they had an efficiency of 2 (4 roll outs versus only 2 deliveries).  Of the 17 787s that are currently complete, 8 were built in Charleston (including the 2 Kenya Airways jets).  That's a large number compared to the monthly output from Charleston.  This output has increased due to the phase out of the Everett surge line which is currently producing only 1 per month.  I don't know the reason for the slow down in the Charleston delivery rate but it could be related to customer readiness to take delivery of the aircraft.  Also one cannot help notice that a few 787s have been flown to Everett and were (or will be) delivered from that facility.

Boeing has delivered 329 to date since program deliveries began 4 years ago.  This number includes 54 787-9 and 275 787-8. 2015 year to date deliveries stand at 101.  Boeing has said that they plan to deliver over 120 787s this year and I believe they can achieve over 130 this year.  Over 60% of the total 787-8 order book has been delivered while over 10% of the total 787-9 order book has been turned over to customers.  What is noticeable is that since June the number of 787-9 delivered has either equal or exceeded the number of 787-8 delivered.  I expect this trend to continue for quite a while since most of the -8s have been delivered, of course this is barring any large -8 orders that Boeing books over the next few years.

Notable 787s that were delivered included ZB412 (LN 345, JA873A) a 787-9 for ANA otherwise known as the "Star Wars jet."  ZB362 (LN 346, G-ZBKA) for British Airways.  This is the carriers first of 22 -9s.  They should have over 16 in the fleet a year from now.  ZA685 (LN 343, B-2763) is the 6th and last 787-8 for Xiamen Airlines. ZA225 (LN 344, VH-VKL) is the last 787-8 for Jetstar.  All future 787 for QANTAS will now be delivered directly to that carrier.

Even though this is preliminary, I expect that Boeing can deliver up to 14 787s but this number includes the 2 Kenya Airways jests which I list as "In Storage."  Some notable deliveries planned for October include the first 787-8 to Oman Air, 2 787-8s to Qatar Airways, 2 787s to Scoot (one -8 and one -9) and two more 787-9s to British Airways.  If Congress can resolve the Ex-Im Bank issue (October 2015 might be the last chance to do this until 2017) then the two Kenya Airways 787-8s can also be delivered.

Lastly, word though an article by Flightglobal, indicates that Emirates won't make a decision on the 787-10 vs. the A350-900 until next year.  So we can now forget about any major Emirates orders coming from the Dubai Airshow next month.

787 Full Production Table

Wednesday, September 16, 2015

787 deliveries in September set to slow down ahead of 3rd quarter end

787 deliveries look to slow down this month compared to the 13 airframes handed over in August.  So far in September, Boeing has delivered 3 787s and I project that there will be 7 to 8 more deliveries by month’s end.  Again the two 787-8 for Kenya Airways are sitting in storage this time in Everett to where they were recently ferried.  The windows and doors are sealed indicating a long period of storage.  It seems they won’t be going anywhere soon.  Another 787-8 for PrivatAir is also still waiting to be delivered but the reason for the delay is unknown while for Kenya Airways it’s the lack of financing to complete the purchase coupled with the closure of the Ex-Im Bank (thank you US Congress).  What is unknown is how many other future 787 deliveries may be impacted by Congress’ refusal to renew the bank’s charter and allow it to finance foreign purchases of US made products.

Notable deliveries this month include the first 787-9 to British Airways and Xiamen Airlines’ final 787-8.  United should also be receiving 2 787-9s and the recently unveiled Star Wars 787-9 for ANA will also be delivered by the end of the month.
Monthly 787 Deliveries by Model
Boeing is now just starting to deliver more 787-9s than 787-8.  In September, I expect that Boeing will deliver 6 787-9 and 4 to 5 787-8.  The 787-9 to 787-8 delivery ratio will only get larger as time wears on due to the large number of 787-8s already delivered without additional orders to increase the -8 order backlog.

Looking at future deliveries, one cannot help but notice that certain airlines will get a majority of their 787 fleet delivered in short order.  For example, British Airways will receive 16 of the 22 787-9 over the next 13 months starting this month.  American Airlines, who took it's first 787-8 in January 2015 will have 17 in its fleet by the end May 2016.  United took it's first 787-9 in September, 2014 and should have all 18 aircraft in their fleet by the end of June 2016 a period of 21 months.  Virgin Atlantic has 17 787-9 on order and has 7 in their fleet already.  They will have 13 aircraft by the end of June 2016 also a period of 21 months from the time they took first delivery.  Boeing large and important clients are taking on the new aircraft in significant quantities as they look to renew fleets, reduce fuel and maintenance costs, and supply a better product to their customers...despite 9 abreast seating.  Other airlines are in no rush, for example, Etihad has 41 787-9s on order and has taken delivery of 5 this year and will take another 5 next year.  A very slow process compared to British, American, United and Virgin.  Deliveries in 2017 will look very interesting but I can see Air France and KLM getting much of their fleets filled out during that time.

787 Full Production Table