Boeing released its 2014 financial results and while the
company reported record earnings as well as higher 787 deliveries, it also
reported higher deferred production cost (the gap of actual cost of production of each aircraft vs. the average cost over the accounting block which at this moment is 1,300 aircraft) had increased by almost $1bn over the
4th quarter to $26.149bn up from $25.189bn.
Year over year increase in deferred production costs was $4.5bn, an
increase of almost 21% year over year! Mush
of this increase was due to increasing the inventory of parts as well as
maintaining high employment levels within the 787 program.
Boeing’s 787 delivery guidance was reported by CFO Greg
Smith as the annual production rate plus 3 to 4 early build aircraft. This would mean a total delivery guidance of
123-124 787s for 2015.
However, one question that was not asked if this delivery guidance included
the 3 787-9s that were used for flight testing and certification purposes. The
big question is that do they consider the 3 787-9 that were used for the
certification program last year as early build? If so, then are the only
"early build" deliveries would be the 787-9s that are earmarked for customers
this year? If not then Boeing can deliver the 120 regular production + 3
787-9 from test flight + 3-4 early deliveries (terrible teens) which would add
to 127 deliveries. 2 out of the 3 787-9
test airplanes are at the EMC being bought up to certification standards for
delivery to Air New Zealand while the third is parked on a runaway at Everett.
Boeing expect that the 787 program should become cash positive this year meaning that revenue for each delivered 787 will exceed the cost of production though the program as a whole will still be running at a loss. Additionally, Boeing expect deferred production cost to moderately increase this year before declining next year when the 787 rate goes to 12 from 10. Obviously getting a handle on production costs will include renegotiating (read: squeezing) the supply base as well as lowering labor costs within the program. Greg Smith reported during the earnings call that 787-9 production costs fell 20% from the first delivered aircraft and 30% for the last 175 delivered 787-8 airplanes.
In other news it looks like Air Force One will continue to be a Boeing product. The Air Force is going to negotiate for the delivery of three 747-8 air frames to replace the current 747-200 that have been in service for over 20 years but are dated. This will be a non competitive acquisition but mission equipment and furnishing will be competitively sourced. The only question that remains is will they acquire a 747-8I or 747-8F?
787 Full Production Table
In other news it looks like Air Force One will continue to be a Boeing product. The Air Force is going to negotiate for the delivery of three 747-8 air frames to replace the current 747-200 that have been in service for over 20 years but are dated. This will be a non competitive acquisition but mission equipment and furnishing will be competitively sourced. The only question that remains is will they acquire a 747-8I or 747-8F?
Total 787 Deliveries By Customer
2015 Projected Operator Deliveries
2015 Projected Customer Deliveries
2015 Projected Operator Deliveries
2015 Projected Customer Deliveries
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