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

Boeing 787 achieve 800 customer deliveries in February

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	Number
Testing Complete	3
To be assembled in Everett	128
To be assembled in Charleston	129
Parts Arriving	6
Undergoing final assembly	7
Storage	2
Storage/Change Incorporation and Re-Work	0
Change Incorporation and Re-Work	1
Pre-Flight Prep	12
Production Testing	4
Non Customer Flight Tests	0
Ready for Delivery	7
Donation	3
Delivered	800
TOTAL	1102

Boeing delivered 11 787s in February and in the process achieved 800 787 deliveries to paying customers.Boeing delivered 10 x 787-9 and 1 x 787-10.  So far this year Boeing has delivered 19 787 (16 x 787-9 and 3 x 787-10).  Total deliveries through February stand at 800 (360 x 787-8, 422 x 787-9 and 19 x 787-10).

787 number 800 went to Norwegian Air and was delivered on February 28.  This aircraft is L/N 813 (ZB837, G-CKWS).

Notable deliveries in February includes GECAS' 1st 787 which was leased to Suparna Airlines (owned by Hainan Group). This is also Supana's 1st 787.  American Airlines accepted the last 787 from its first order of 42 Dreamliners.  They have a new order of 22 x 787-8 and 25 x 787-9 which was placed last year.  This will give American 89 787s when the second tranche of 787s are finally delivered.

March deliveries look to be about 14 thus it appears that Boeing will start achieve a 14/month delivery rate this month though I'm still waiting for more information to confirm this.  If this hold expect a nice boost to Boeing's earnings with this increase rate and the expected accelerated drop in the deferred accumulated production costs.

As previously reported, Boeing rolled out 13 787s in January.  In February, Boeing rolled out 15 more thus it appears the 787 program is firmly producing at 14/month.  I expect a slight dip in roll outs in March due to February being a shorter month and Boeing starting final assembly on only 12 airplanes but Boeing is now rolling out 787s at 14/month.  Moreover, it appears that Boeing has assigned even numbered line numbers to Charleston and odd numbered line numbers to Everett.  Lastly, it appears that Boeing's production schedule has two 787s rolling out of the factories on the same date....one from each final assembly location.  I believe this is to standardize production and delivery schedules.  If you take a look at the 787 spreadsheets, starting in mid February, one 787 was rolling out of Everett and Charleston each. We'll see if this trend continues.

Finally, orders are coming in for the 787.  Bamboo Airways of Vietnam was revealed to be the customer who ordered 10 787-9s in January.  This morning Lufthansa signed on to be the newest 787-9 operator.  Lufthansa confirmed to me that the this order is a firm order for 20 787-9s and the contract does not contain any options.  The German air carrier is another "blue chip" airlines to order the 787 (they also ordered the A350-900).  These airplanes are to be delivered between 2022 and 2027 and will replace some of the A380s that the airlines will be selling back to Airbus.  Ouch! Thus far in the 1st quarter of 2019, Boeing has firm orders for 38 787.  As I mentioned previously, Boeing needs to book on average of 14/month to keep up with the new production rate.  If the 1st quarter order book shows at least 42 787s ordered then it validates Boeing decision, thus far, to produce at 14/month.

Make sure you check out my 787 Spreadsheets for all the latest information:

787 Spreadsheets