During yesterday's Investor's Day conference, Boeing addressed the 787 and the ongoing issues still facing that program. While the tone was upbeat, the theme was risk and cost reduction throughout the 787 program. Boeing stated that they are continuing to de-risk the 787 program because of the maturity and stabilization of the production system. However, my concern with that it is not only the stabilization of the production system that needs to occur but improvement in build quality of the 787. Currently it appears that it takes Boeing about 100 to 110 days from the start of final assembly to delivery of the 787 though there are outliers both under 100 days and over 110 days. While I do not have any comparable numbers to another program like the 777 it is, without a doubt, crucial that this metric is going to be key to improving efficiencies, de-risking the program and improving margins that Boeing is looking to accomplish with the 787. Boeing CFO, Greg Smith, stated that the 787-8 has improved unit cost by 15% over the last one year and final assembly flow time improved by 10% during the same period. The 787-9 has seen both unit cost and flow time improve by 30% since the first unit entered final assembly last year. So it does appear the final assembly flow time is coming down but again build quality is still going to be important going forward and Boeing has not addressed.
During the conference Jim McNerney addressed the need to do a 757 replacement and he gave a clear indication that the replacement will not be a clean sheet design but a using one of the current platforms that Boeing has designing a derivative to fulfill that need. He did specifically mention the 787 as one of the those platforms (in addition to the 737).
Boeing is also looking to leverage the highly successful development of the 787-9 for the 787-10. Approximately 90% of the 787-10 will share commonality with the 787-9 thus greatly reducing the development cost of that aircraft.
In terms of service reliability, Boeing states that they are hitting around 98 to 98.5 but want to be well into the 99% range (99.5%) but are not there yet. They haven't stated on how they're going to get there and the reliability rate really in unchanged from the last reported rate which Boeing gave during their 1st quarter earning report.
On the production front, Boeing is about to increase the rate at Charleston from 2/month to 3/month. This rate break should occur around early to mid July and we would also see a commensurate reduction in the rate at Everett from 8/month to 7/month. Boeing is confident that they can now do this as the production system is stable despite the issues with the mid-body fuselage build in 88-20.
Charleston will also start assembling the 787-9 starting around November of December for delivery in the first quarter of 2015. As for the remainder of the year see my spreadsheets for the 2014 78 delivery projections. I'm still agreeing with Boeing's guidance for 110. I believe 11 of these will be 787-9s.
Lastly, it appears that Boeing may have completed F&R/ETOPs testing for the Rolls Royce powered 787-9. ZA197 (LN 146, JA830A) flew back to Everett last night and it may have to go through a short period of re-work before being delivered to ANA. Air New Zealand should get the first one around late June to early July with United expected to receive their first 787-9 in mid to late July. 787-9 flights have slowed noticeably in the last week so I believe that Boeing is close to if not finished with flight testing.
Full 787 List
Current 787 Production List
Delivered 787 List
787 Monthly Delivery Tracking
787 Customer Delivery
787-9 Flight Test Hours
Current 787 Operators
Projected 2014 787 Deliveries