Friday, July 31, 2015

Boeing 787 deliveries reach over 300; posts 12 deliveries in July

Over 4 years ago the 787 program was starting to emerge from most of the issues that had plagued the program since 2007. The first delivery was right around the corner to ANA. A little less than 4 years after program deliveries began, a time when Boeing was barely reducing 2 787s each month. Now Boeing has reached 300 deliveries coming from 2 different production facilities running at 10 per month for 2 different models of the 787.  Boeing announced #300 though Randy's Journal, but they won't name the carrier.  It's possible that it was ANA but that is speculation on my part.

Boeing's 300th 787 delivery come amidst a drive to increase the delivery rate in the third quarter.  I'm not sure which airline accepted delivery of number 300 but it is either ANA, United Airlines, Etihad or Air Canada.  Through July 31st Boeing has delivered 304 787s, 76 in 2015 and 12 in the month of July.  The aircraft maker also rolled out 11 787s from its factories; 7 from Everett (including the surge line in 40-24) and 4 from Charleston.  11 787s starting final assembly in July with 5 on the main Everett line in 40-26, 1 going to the surge line in 40-24 and 5 in Charleston.

Production efficiency improved this month, particularly at Everett as 9 Everett 787s were delivered vs, 7 rollouts.  Charleston was hurt because of the delayed delivery of the two Kenya Airways jets.  Their efficiency number was not as good given the 3 deliveries vs. 4 roll outs.  Overall the 787 efficiency was .92 a good number but could have been better if Kenya was ready to take its 2 remaining 787s.

July deliveries would have been higher but for Kenya Airways and PrivatAir deferring the delivery of  3 787-8 which are ready to be handed over.  PrivatAir's delivery now looks to be in August and the two Kenya Airways may be handed over in September.

Looking forward, Boeing is planning for 15 deliveries including the PrivatAir delivery.  6 airplanes slated for August delivery have yet to take their B-1 flights including 2 787s at Charleston.  Only 4 are ready for the August delivery but that will, of course, change over the next couple of weeks.

787 Full Production Table

Wednesday, July 22, 2015

787 results from Boeing's 2nd quarter 2015 earnings call

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.

Tuesday, July 21, 2015

Boeing looking to deliver large number of 787s in 3rd quarter.

As we get closer to the end of July, Boeing is starting a drive to deliver as many as 135 787s this year and key to that will be deliveries for the third quarter. To that end it appears that Boeing will try to deliver a total of 13 787s in July. Most of the aircraft to be delivered this month already have their customer flights (2 have yet to fly a customer acceptance flight). The 300th 787 to be delivered will be amongst this group of 13 airplanes and currently it appears that ZB079 (LN286, A6-BLC) for Etihad will have the honors but that may change. The delivery drive won’t end there as Boeing is planning to deliver around 18 to 20 787s in August (some of which were deferred deliveries from earlier months) and 12 to 14 in September. If all the 787s projected for delivery are actually delivered in the 3rd quarter, we can see 45 787s going into customer hands in the quarter which is a huge number. Deliveries are expected to tail off in the fourth quarter, particularly in the last month and a half of 2015 with no more than 27 possible 787 deliveries.

This is a large number of deliveries and this is a plan as of now but it is something that Boeing is attempting to accomplish over the next two and half months. The key will be production flights to prepare for the onslaught of 787 deliveries in August. So far only a few 787s that are slated for delivery in August have flown but I do believe that will change over the next couple of weeks. 18 deliveries in one month are possible for the 787 program and it is something they had accomplished during Dec. 2014. Again a good indicator is the number of B-1 flights that take place between now and around August 20th.

For July, Boeing has delivered 5 787s so far with an additional 8 scheduled for delivery over the next 10 days. Air New Zealand will receive one of the 787-9 test aircraft that had under gone re-work and rebuilt to production standards. This aircraft, ZB002 (LN133, ZK-NZD) will be the 298th 787 delivered. After that there are 4 787s that are tentatively scheduled to deliver on July 27th. They are ZB079 (LN286, A6-BLC) for Etihad, ZB536 (LN303, VN-A861) for Vietnam Airlines, ZB410 (LN319, JA871A) for ANA and ZB173 (LN324, N45956) for United Airlines. Note that all these deliveries are 787-9s. As I mentioned, I believe that ZB536 will probably be the 300th but we’ll have to see. Boeing should close out 787 deliveries for July 2015 with ZB558 (LN323, C-FNOE) for Air Canada on July 29th which is also its first 787-9 and ZA142 (LN322, JA840A) a 787-8 for ANA. There were two 787-8 that were scheduled for delivery to Kenya Airways (ZA662 (LN307, 5Y-KZH) and ZA663 (LN317, 5Y-KZJ)) which are now scheduled for a late August delivery.

Finally it looks like Crystal Cruises is picking up some 787s according to this article in USA Today. My sources say that they may be picking up 3 787-8s from the terrible teens (they have a variable number that starts with ZD). The only ones that make logical choice are LN 5, LN17, and LN19 which are all GE equipped 787s. Also on the possible new order front, EVA Airways is saying that they plane on buying 24-26 787s for delivery between 2018 and 2019 according to a report by Reuters. We’ll see when these do in fact materialize.

787 Full Production Table
787 Build Location By Operator 
787 Build Location By Customer

Wednesday, July 15, 2015

787 July 2015 Mid Month Update

Now that the second half of the year is underway, we should expect to see some changes in the 787 program the most visible of which is the production taper of 787 temporary surge line in Everett.  Last month there were 3 787s loaded into the Surge position 1 to start final assembly.  Starting this month Boeing will load only one 787 into the surge line in building 40-24 and that will come at the end of the month for the next four months.  40-24 is going to be a very lonely place until 777X production get started in three years.

The 2 787s from surge production are being allocated one each to the main lines in Everett 40-26 and North Charleston 88-30.  In fact North Charleston production is already very busy with 8 airplanes on the final assembly floor and another 6 on the flightline.

Boeing can deliver a total of 12 787s this month,  8 787-8 and 4 787-9.  I expect that there can be up to 6 deliveries in July from North Charleston including one 787-8 for PrivatAir that was assembled At Everett but ferried to South Carolina.  One 787-8 for Kenya Airways was supposed to be delivered in June but was held up at the request of the customer for unknown reasons.  Sources say that this airplane should be delivered this month which would be the 6th delivery out of North Charleston.  Some notable deliveries would include the first 787-8 for Scoot and Vietnam's first 787-9 as well as the aforementioned first 787-8 for PrivatAir.  Boeing has already delivered 2 787, both to Jetstar.

Thus far through today, July 15, 2015, Boeing has delivered 2 787s this month, 66 in 2015 and 294 total since deliveries began in September 2011.

There was some good news and some potentially not so good news for the 787 program.  First the not so good news.  Zodiac Aerospace has more trouble again when an explosion occurred (a possible chemical explosion) at its interior fabrication plant in Newport, Washington.  Both Boeing and Airbus are reviewing the impact to their production lines but I do believe that this will impact Boeing more than Airbus.  It is unclear if it will impact 787 deliveries at this point.

The good news for the 787 program is that the 787-10 has completed its CDR (critical design review) and is on its way to having 90% of detailed engineering drawings completed by the end of the year.

787 Full Production Table
787 Build Location By Operator 
787 Build Location By Customer

Tuesday, July 7, 2015

Enterprising Pilot Turns 787 Scraps into Works of Art

Photo Courtesy of Michael Kurchina
Ever wonder what happens to the scrap carbon fiber cutouts that results from the production of 787 fuselage sections?  Spirit Aerosystems cuts out 18 window panels from each 787 section 41 it produces for Boeing.  That is 180 carbon fiber "windows" that are discarded each month.

Photo Courtesy of Michael Kurchina

Photo Courtesy of Michael Kurchina
This is where Rouge pilot (the LCC division of Air Canada) Michael Kurchina steps in.  After arranging a visit to Spirits' 787 production facilities in Wichita, KS, Michael was granted permission to take a couple of the carbon fiber window cutouts during his visit.
Photo Courtesy of Michael Kurchina
Michael was also given permission to take the flight deck window cut outs of Air Canada's first 787-8.
Photo Courtesy of Michael Kurchina

This is where Michael turned a hobby into a 2nd career.  He got permission from Boeing, Spirit and Air Canada to receive the carbon fiber window cut outs from the 787s that are destined only for Air Canada on a regular basis which are turned into personalized and polished display plaques.  He produced a few for the Future of Flight as well as for pilots and executives at Air Canada including CEO Calin Rovinescu.

Michael receives regular shipments of the window cutouts from Spirit from the section 41 of Air Canada's Dreamliners via Fed Ex.  The section 41 has 18 window cutouts (9 on each side) thus he has the potential of receiving almost 1000 cutouts coming from Air Canada's 787 order (including if the carrier exercises its options).

When he receives them with a large cut out grove in the middle (from the diamond or carbide cutting tool) which he fills, coast with polyurethane and sands down.  Michael actually codes each panel with the line number, registration, fin number, serial number, variable number and the position on the actual aircraft that the cut out came from.
Photo courtesy of Michael Kurchina

Michael then produces the graphics which includes the aforementioned details on the graphics which is done on Fuji Metallic by Fotobox which is cut out and then laminated.  Michael cuts them out by hand.
Photo courtesy of Michael Kurchina

The cutouts are then mounted in a specially constructed jig.  Michael enlisted the help of Adam Mills who then sprays the window panels with automotive clear coat for protection. After it's dried the clear coat is sanded with three different grits of sandpaper (1000 dry, 1500 wet, and 3000 wet), two levels of polish and finally a rubber edge is then put on around the perimeter of the window cut out.

Michael can be reached at with regards to interest in his window plaques.  As far as getting the cut outs from 787s other than those going to Air Canada, Michael says he would need permission from Boeing, Spirit (section 41 supplier) and the 787 customer. For now he's not planning for that but it may change if he adds staff and he sees a demand for these unique window plaques.

Here are some videos of how these window plaques are made: