Wednesday, July 25, 2012
Photo by Bernard Leighton
Today was quite a day for Boeing and the 787. A lot of news today so let's get started
Boeing's Earnings Call
Boeing Earning's came out today and showed quite an improvement. As far as the 787 is concerned Boeing said a few things that were already known but let's go through the highlights. Boeing is saying that they're seeing a high level of completion of aircraft coming out the final assembly line at Everett. It's close to 100% apparently. They're still tracking to increase production to 5/month by the end of this year and 10/month by the end of 2014. Boeing is expecting to see higher 2nd half 787deliveries both from aircraft coming off the assembly line as well as those finishing change incorporation. However Boeing does expect to see an increase in inventory as deferred production balance was recorded at $13.2bn and is expected to grow to about $20bn by the time the production rate hits 10/month after which there should be decline in this balance as airplanes are cleared out of inventory and the production system stabilizes at that rate. In terms of deliveries Boeing said the deliveries were paced by customer demands and request. It seems that this may be the reason why there hasn't been too much 787 pre-delivery activity at Everett. They also said that aft fuselage production is a "hot spot" for Boeing in terms of 787 production and they still have some issues there which they're addressing. It's not a show stopper for the production rate increase. Jim McNerney said that the most important thing is that production is now occurring without the need to send airplanes to the Everett Modification Center (EMC) for change incorporation. He also said that there is plan to get the aircraft that have to go through the EMC out in an orderly fashion. He said that the EMC will continue to see work for the next year and half plus (so let's assume for another 18 to 21 months or end of first quarter 2014). Aside from Air India (a deviation from planned deliveries) which is all to well known, Boeing does have a ramp plan for deliveries for the second half of the year. In terms of the improvement they said that ZA182 (LN70, JA828A) had about 160 open jobs left so they're seeing a lot of improvement in the condition of assembly. Boeing is also seeing improvement at the EMC in terms of work behind schedule and shortages. They also said that the Trent 1000 gear box issue won't affect deliveries and 4 of 5 of airplanes ANA airplanes have been fixed and it's a very minor issue. This issue won't affect deliveries of the airplane. Boeing also gave more indications (there is greater fidelity on the evaluation of the business case) that they will do a 787-10X and that a decision should come later this year or early next year. McNerney said that it does look like a good airplane which would have a lot of market demand.
Looking ahead to 787 delivery forecast for the remainder of the year, Boeing said that they still expect to deliver between 35 and 42 787s for all of 2012. They have already delivered 11. This means that between 24 and 31 787s will be delivered by the end of this year and this will be split 50/50 between airplanes from EMC and those coming off the final assembly lines in Everett and Charleston. Thus Boeing is saying that they would deliver between 12 to 15 787 each from EMC and the final assembly lines over the next 5 months starting in August (1 787 already has been delivered from the EMC in July).
Delivery of Air India's 787s is one step closer as an Indian Government Group of Ministers (GoM) had approved the deal between Boeing and Air India. The matter now goes to the Indian Cabinet for final approval. If and when that approval is given the delivery will take place and the fly aways will occur. It's not known when the Indian CCEA will meet next but it is at his next meeting that the compensation deal will be discussed.
Aeromexico added to the days news with a huge letter of intent (LoI) for 90 737 MAX8 and 737 MAX 9 as well as 10 787-9. The deal is worth about $11bn. It is not known if this order is inclusive of options of not but when the deal is finalized the numbers will then be known. Aeromexico currently has orders for the 787-8 (both purchase and lease) and is expected to start taking deliveries starting in 2013.
The first 787 fro Ethiopian (see picture above) flew back to Everett this afternoon. ZA262 (LN 49, ET-AOQ) flew back in the Ethiopian scheme after spending close to two weeks in Ft. Worth being painted. There were other 787s flights today but were test airplanes conducting Boeing test flights out of Boeing Field. It is not known when the next B-1 flights will occur next but there are still some 787s that need the new gear box fro the Trent 1000 powered airplanes. The timing of the next 787 test flights is also clouded by the planned closure of Everett's main renway from 4pm on August 2nd to 8AM on August 6th. It is possible that Boeing can get 1 possibly 2 787s into the air for their B-1 flight before August 2nd but only if they're ready.