Friday, April 28, 2017

Boeing talks about 787 during 1st quarter 2017 earnings conference call

Boeing gave an upbeat assessment of the 787 during the 1st quarter 2017 earning call.  Boeing deferred production cost for the 787 program decreased by $316 million during the 1st quarter.  The total program deferred production cost is now just under $27 billion.  Of course the achievement during the quarter is the start of flight testing on the 787-10 on March 31st.  So fat the sole 787-10 flight test aircraft has flown just under 90 hours and I expect it to be at or beyond 100 hours by the end of the month.

However, the current downturn in commercial aircraft market, particularly in the sale of widebodied  jets has analysts questioning Boeing's drive to increase 787 production from 12 to 14 per month by the end of the decade.  The 669 orders that are still represents about 4.5 years of production.  Given the slowdown it hard to imagine that Boeing can go up to 14 and it may be even hard to sustain 12.

Boeing execs still insist they can reach the order goal to go up in rate and I believe that would take a major order like the one that Emirates is proposing to make between the 787 and the A350.  Still Boeing book to bill for the 787 is not anywhere close to a number that would justify 14/month.  They do feel that they are on solid ground to sustain 12/month but unless there is a decent wave of orders coming through that will be hard to maintain.

Lastly, Boeing is continuing with the cost cutting measures company wide which included a around of lay-offs in Everett last week.  


Andrew Boydston said...

Uresh; only Boeing knows what it has on deck for WB sales. The Emirates is a pivotable deal for either Airbus or Boeing and it may not announce during 2017. However, The Dubai airshow in the fall (November) may be the big event for Boeing as it is saddled up next to the Emirates space in the Dubai pavilion. Boeing is long ranging the forecast based on tentative deals it has. Delta may come back to Boeing as it rescheduled the Airbus wide body order during 2017. The 787-10 will make a sales difference for Boeing also during 2017. Then there is the far east equation where end of year announcements should include a wide body order contingency in the offing. The best instinct I have for the whole order turmoil is that several big announcements for WB orders are hanging until further notice which makes for a perilous down year for Boeing's order book but not necessarily a certain catastrophic outcome for the year. The should of, would of, and could of syndrome is in action for the wide body segment.

Tarek said...

I also expect AC to pick up their options - not a huge order by any stretch of the imagination but there are 10 of them.

AC's pilot contract allows them to replace 767's at Rouge one for one with 787's once the existing firm orders are fulfilled at mainline. unclear if AC would move 788's to Rouge and order more 789's or maybe even the dash 10 but it is a certainty that they will pick them up as I'm sure they are at great prices.

As to if the order is made in 2017 is really contingent on when the decision on their options has to be made by....

Rob D said...

Nice order from WestJet today!