Boeing released its 2nd quarter 2015 earnings this morning. In it they revealed that cumulative deferred production cost increased by $790 million over the quarter (compared to $793 million during Q1' 2015). Total 787 program deferred production cost now stands at $27.7 billion, a number which is not expected to decrease meaningfully until production hits 12/month sometime next year (a goal toward which they are tracking well). They should see a drop in the growth of deferred production cost in the 4th quarter of this year.
As I reported earlier, Boeing had delivered 64 787 up to June 30th, 2015 and over 290 since program deliveries started. Production is now balanced between both the 787-8 and the 787-9. The 787-8 saw production cost decline 35% over the first 210 deliveries but more impressive is the -9 cost reduction of 30% over the first 34 deliveries. The -9 should be more profitable for Boeing than the -8. This is significant as Boeing has more 787-9 and -10 (assuming that the largest 787 derivative also follows a similar cost reduction curve as the -9) to deliver than the -8s. This means that higher margin potential for the remaining deliveries is greater. Boeing sees that the -9 has higher level of profitability next year. This is all attributable to lessons learned in the 787 program as well as smoother entry into service for the -9.
In addressing 787 deliveries for the second half of 2015, CFO Greg Smith said:
"On deliveries, certainly we expect the back half to be healthy on 787 deliveries. But as you know, quarter to quarter, Cai, purely from customer ability to take the aircraft, that moves around a little bit. But we're comfortable about where we are on our guide. If we have the opportunity to change that, we'll do that. But I'd say we're well on track to hit that, our objective on about 120. So I think we're in pretty good shape there. But again, the back half will be important for us."
Thus Boeing is hinting that the third quarter 787 deliveries may be big and I'll be watching that very carefully.