Big changes for 787 program as manufacturing defects, demand and Covid-19 sends Dreamliners into storage

The past year has been a challenging one for the Boeing 787 program.

Even before COVID-19 became a household word, global commercial aviation was already facing a downtrend in the demand for widebody aircraft like the 787.  2019 saw a decrease in new 787 orders to such a point that Boeing was considering a rate cut. Covid-19 added to the production and delivery stresses for the 787 but now the manufacturing issues with the circumferential fuselage join where the skin of the airplane does not meet certain flatness or smoothness criteria at the the areas of fuselage join has all but stopped 787 deliveries though Boeing still is continuing to push production through both 787 final assembly lines though at a vastly reduced rate.  These two factors have created a glut of stored 787s at Charleston, Everett as well as at Victorville and a couple other smaller sites around the country.

However, the issue is not relegated to just newly assembled aircraft at Everett and Charleston or stored airplanes but also to those in service with airlines around the world.  Those Dreamliners will have to be checked during their next maintenance period and then repaired.

Some readers may recall that earlier this year, a few of Boeing's customers had to ground 8 newly built 787s because of 2 separate improper manufacturing issues that, when combined, had weakened the rear fuselage sections (sections 47/48) of the each of the grounded Dreamliners.  

Now the new issue surrounding the circumferential fuselage join where the sections of the 787 are mated and fastened together can have gaps that are created by the manufacturing flaw.  The flaw is not related to work done at any one location or by any one of Boeing's partners but is related to how the strips of carbon fiber tape are laid on the fuselage mold and cured in the high temperature and pressure autoclaves.  Boeing is still investigating how this issue has developed but it appears that they have a fix or are in the process of developing a fix.

Now this issue has huge implications for Everett and Charleston and the move of all final assembly work from Washington State to South Carolina.  The last Everett produced 787 will be a 787-9 for Hawaiian Airlines (ZE315, LN 1129).  

In a letter leaked to this blog, Lane Ballard, 787 program vice president and general manager and BSC site leader, says that Boeing has been "performing quality inspections related to fuselage skin flatness and shimming on all aspects of the 787 fuselage join. These inspections are taking place on yet-to-be-delivered airplanes" to ensure quality of the airplanes to be delivered. Boeing is also engaging in join verification requirements during in sequence assembly at each final assembly position.

However there is some big news concerning Everett's involvement in addressing the manufacturing issues amongst the fleet of built but yet to be delivered 787s that are being stored. Boeing is currently planning to simultaneously reduced the 787 build rate to 5/month and transfer all 787 final assembly to Charleston in March 2021. This means that there is freed up space at Everett to do the join verification and inspections as well as the rework of those affected joins thus while production has stopped at 40-26, there will be on going work to correct the manufacturing issues taking place at Everett's newly abandoned final assembly line. The join verification, inspection and rework to current in production 787s will also slow down final assembly in order that this work be done properly.

According to Ballard, Boeing South Carolina will also free up space in two final assembly positions in 88-30 for the inspections and rework: "All four of the current Everett 787 final assembly positions will become join verification positions, and two additional positions will continue to be utilized in the Butler building (building 45-12) at the Everett site. Additional join verification positions will be created in the South Carolina final assembly facility, while the balance will remain production positions." Boeing's "intent is to leverage additional resources in Mid Body, Aft Body and Everett Final Assembly to staff the respective join verification positions at their location. This join verification activity, however, will likely extend 787 work in Everett beyond the production consolidation plan." 

Ballard also added that "Airplanes that are stored until delivery, and airplanes currently in our production system, will go through this join verification process. Stored airplanes assembled in Everett will go to Everett for join inspection and delivery, and stored airplanes assembled in South Carolina will go to South Carolina for join inspection and delivery."

It remains to be seen how deliveries in 2021 will be impacted but currently Boeing has 88 787s that are in final assembly or in pre-delivery (including storage, and predelivery test flights or awaiting the start of test flights).  This back log will undoubtedly grow in the first quarter of 2021 but should start to shrink around March-April as the program breaks rate to 5 per month and the first few airplanes to complete the inspections and rework are delivered.

Boeing's ability to deliver 787s to customer's is also going to be impacted by the financial health of those customers themselves.  Covid-19 has hit the airlines extremely hard and I don't believe that some of these airlines will survive let alone be in a financially stable condition to accept new 787s.  Norwegian is one airline that comes to mind.  They have been in trouble even before the pandemic but the drastic reduction in revenues makes their viability to continue doubtful.  The airline recovery from Covid-19 as well as the 787 delivery skyline is dependent on the availability of the newly approved vaccines not just here in the United States but elsewhere around the world.  Transmission rates worldwide need to come down if intercontinental travel that utilizes the 787 is to recover.

Lastly, I want to add a word about the future of this blog and the spreadsheets I use to track the 787 program.  I know I've been away for over a year (due to demands of my regular job) but I plan on continuing to post 787 updates when I can but unfortunately I have lost several sources that have been invaluable to this blog and to posting updates to the 787 spreadsheets.  I'll try to update the spreadsheets as best as I can but unless I get new sources of solid information it will be difficult.  If there are any followers/readers of this blog out there who can supply me with information, I as well well as the followers of this blog will be most appreciative.  Please reach out to me.

787 Spreadsheets

787 Update - Boeing to make big 787 delivery push in December

Boeing has fallen far behind in delivering 787s to customers this year for a different reasons but the slow down deliveries has occurred at both Everett and Charleston though for different reasons.  Charleston seems to be catching up to their schedule whereas Everett is still far behind. Assuming a 7/month delivery rate (77 for each build site) Charleston currently has delivered 71 while Everett has delivered 63.  There are thee more 787s scheduled to be delivered this month: 2 from Everett and 1 from Charleston thus the final numbers should be 71 from Charleston and 65 from Everett.

So what gives?  Why is Boeing so far behind.  The answer depends on the delivery site. 

Charleston continues to have workmanship issues forcing them to move unfinished aircraft outside in order not to create bottlenecks within the Charleston final assembly line.  These airplanes are then moved back inside to finish assembly tasks that are not able to be done out on the flightline. The Charleston site is now utilizing all 8 assembly sports within building 88-30 to not only assemble but finish assembly and outfitting tasks.  Hurricane Dorian which hit the Charleston region in early September didn't help matters though production was stopped for a while there was no major damage to Boeing's plants there or to those aircraft that were stored there and could not fly to escape the storm.  Charleston has been making a comeback of sorts as deliveries from August through November have been 7/month or higher but they sill need to make a push if they're are to achieve 84 deliveries by the end of the year.  Currently there are 11 787s on the flightline at Charleston waiting to be delivered.

Everett has been consistently rolling out 787s at about 7/month this year but the flightline backlog has grown.  It's not due to production issues but rather customer issues have held up deliveries. Qatar Airways currently has 7 787-9 on the Everett flightline and this is probably due to Qatar's intense regard to workmanship issues and getting the planes in a condition that they find acceptable.  Readers of this blog understand these standards all too well.  Hainan Airlines delayed deliveries of 787-9s that were already built so but Boeing was able to reallocate these airframes to Vistara Airlines which will take delivery of them starting in January of next year. Similarly, two 787-9s for GECAS leased to Hong Kong Airlines were not taken up (NTU).  These airplanes were subsequently cancelled from GECAS' order and sold to Biman Bangladesh Airlines.  These two airframes will be delivered in December.  So the delays in deliveries at Everett are customer driven and it's impossible to separate the delays in deliveries for the Chinese bound aircraft from current Trump trade war with China.  Currently there are 20 787s on flightline at Everett waiting to be delivered.

Currently I'm projecting 21 deliveries in December which, if achieved, will be the highest number of 787s that Boeing has delivered in any single month since program deliveries began in September 2011. 8 of these deliveries will come from Charleston while the other 13 will come from Everett.  There maybe more as the data I have goes until Dec. 23rd and though Boeing goes on its usual Christmas break after that date, there could be a couple more deliveries made between Christmas and New Years.

The other big news is that Boeing will reduce 787 production rate from 14/month to 12/month starting in late 2020 with the eye of returning to 14/month around 2022 or 2023 depending on future orders.  Much of the 787s issues are related to the ongoing Trump trade war with China.  The orders for widebody aircraft has been taking a hit but Boeing did receive a huge shot in the arm with an order for 30 787-9s from Emirates.  The original LoI signed two years ago called for 40 of the larger (and more expensive 787-10).  Nonetheless Boeing needed this order and was willing to drop 30 777X from Emirates order book in order to keep the 787 skyline full.  However, Boeing does need to see more orders as deliveries are outpacing new orders.  By my count, Boeing has 1,475 total orders of which 915 have been delivered leaving a current backlog of 560 airplanes which is about 3 years 4 months of production.  The reduction in rate will no doubt extend that time frame but there is concern that about the landing future orders.  One bright spot in the program is the continued reduction in deferred production cost.  Boeing reported that total deferred production cost on the 787 program fell to $19.825 bn in the 3rd quarter from $20.969 bn in the 2nd quarter.  This is a drop of $1.144 bn quarter over quarter.  When Boeing moves to the lower rate, there will be a slowing down of the rate of burn off of the deferred production cost balance as Boeing was taking advantage of the scales of production to keep the burn down high.  This will undoubtedly hit Boeing's 787 program margins as well.

Lastly, Boeing is now at a cross roads with the 787 program and there may be opportunities to take advantage of any upcoming wide body replacement market that would come in the mid-2020s.  Namely Boeing could look to do a 787NG/NEO that could be ready around the 2025-2026 time frame.  They should also look at doing a 787F as a replacement for the 767F/A330 Freighters that are currently in service.

AS always I'll keep you all updated with the latest news from the 787 program.  In the meantime you can keep abreast of the 787 production and delivery schedules using my 787 spreadsheets.

787 Spreadsheets

787 May Mid Month Review

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	Number
Testing Complete	3
To be assembled in Everett	178
To be assembled in Charleston	137
Parts Arriving	6
Undergoing final assembly	8
Storage	0
Storage/Change Incorporation and Re-Work	0
Change Incorporation and Re-Work	1
Pre-Flight Prep	6
Production Testing	7
Non Customer Flight Tests	3
Ready for Delivery	4
Donation	3
Delivered	546
TOTAL	902

Mid way through May 2017, Boeing has delivered 5 787 (2 787-8s and 3 787-9s).  For the year Boeing has delivered 46 787s (12 787-8s and 34 787-9s) and overall 546 787s (336 787-8s and 210 787-9s).

Boeing is on track to deliver another 8 787s (1 787-8 and 7 787-9s) for the remainder of May including one early build 787-8 to Ethiopian Airlines.  Of these 8, 4 have had their customer flights and should deliver within the next 1 week while a further 4 more have already had their B-1 first flights and are awaiting to conduct their customer acceptance flights all within the next 8 days.






Boeing, therefore, should complete May with 13 total deliveries and 554 deliveries overall.  One milestone will be the 550th 787 delivery which I'm projecting will be a 787-9 for Hainan Airlines.  This particular 787-9 is ZB789 (LN 562, B-7032) which is painted a high visibility yellow in preparation for special "Kung Fu Panda" stickers to be added after delivery.

So far Boeing has completed 6 787s including the last 787-10 flight test aircraft (ZC002, LN 565, N565ZC).  They started final assembly on a further 7 aircraft during this first half of May.  We may see Boeing back up to producing and rolling out 12 787s per month after the planned disruption caused by the introduction of the 787-10 into the production process.

Boeing's order book got a little bump last week when WestJet finalized it's order for 10 787-9s bringing the yearly 787 order intake to 23.  With the Paris Air Show next month I'm hoping that Boeing will have more 787 orders to announce at the industry event.

787-10 testing continues to proceed during the weekdays in the skies over Washington State.  Notably absent from the test flight activities is ZC036 (LN 548, N548ZC).  The GE powered 787-10 first flew on May 2 and ferried to Boeing Field on May 4th but has not flown since.  I'm not sure for the delay in continued test flights for this aircraft.  It is possible that there is an issue that needs to be rectified before continuing with flight tests or it could be that the aircraft is performing ground tests that are needed prior to returning to the air.  ZC001 (LN 526, N526ZC) is flying and has completed just under 46.5 hours of flights thus far in May.  ZC002 should be flying by June 9th but is currently still inside 88-30 presumably going through some ground tests as as well a wrapping up minor assembly activities.

You can keep track of 787 activities though the spreadsheets which is linked to below.

787 Spreadsheets