Friday, August 29, 2008

Countdown to a strike?

With Boeing's best and final offer out for the IAM and it's membership to study, a countdown has started towards midnight, September 4th. Boeing's offer called for a 11% increase in wages over three years. IAM was looking for 9 to 13% over the same period but was targeting the upper range of that number. An interesting offer was giving each worker $2,500 if they approve the new contract by September 3rd. Clearly, they're trying to talk directly to the machinists. There was also substantial improvements in benefits and Boeing has taken many issues off the table that IAM had objected to including moving to a 401(k) style retirement plan. One thing that Boeing is holding a line on is outsourcing which has formed the backbone of the 787 manufacturing process.

One experienced Everett employee that I talked to termed the final offer as "complete BS" as he'll receive only a pay increase of amounting to only $.25/hour and that new hires behind would essentially be making the same as him. He feels that he's not being paid for the time that he's put in.

Clearly there is dissatisfaction in the IAM ranks over this contract. However, there will be quite a few who will support it. I think particularly the older machinists will be more inclined to support this proposal because of the improvements in the wage and health care options. Boeing's strategy is to repeat what happened in 2002. In that negotiation 62% of the machinists voted against Boeing's proposal. But since they needed a 67% vote majority to go out on strike the proposal was automatically triggered and was forced upon the union membership. Clearly Boeing is hoping that this will be the case this time around.

This could have consequences 3 years from now if this happens as it could lead to a lot of bitterness within the membership that can result in a strike in 2011. We'll know in a few hours what the union leadership will recommend to it's membership.

Thursday, August 14, 2008

Update on large 787 order to be announced

Earlier this week I got information that there will be an announcement of a new 787 operator by around mid-September. Well I've been digging and digging and so far I'm half way to China!

While I've been unable to find out who the new purchaser is I can reveal that the customer who ordered the 23 787 that Boeing booked in January 2008 had ordered two 787 earlier and that those two 787 are for the same unidentified customer. So in a way the customer is not a new customer because they had placed an earlier order for two frames but they are a new operator that has yet to be revealed. So this unknown new operator does have 25 787s on order.

Wednesday, August 13, 2008

787 production slow down

News out of Charleston, SC that Vought will temporarily stop producing the rear fuselage barrels for the 787 is the first indication that the bottleneck at Everett may not improve for a few months. An article in Charleston's Post and Courier News quotes Elmer Doty as saying that they do plan on resuming production of the rear fuselages later this year. It looks like Vought's line is as full as it can be especially since they're shipping only one complete rear fuselage section each month. Additionally, Spirit is also slowing its production of 787 forward fuselages.

The production issues and the travelled work all contributed to a bottleneck at Boeing's Everett's plant where scaffolding has to be put up around the air frames that have delivered thus far in order to finish all the travelled work. That as well as other issues has hindered Boeing from pulling out even one shop complete 787.

While the rest of the supply chain seems to be recovering, Boeing is still dealing with the issues left behind from the earlier issues thus the suppliers will have to slow down their production though it does seem that Global Aeronautica does have room and doesn't need to slow down their production of main fuselages.

This production slow down will allow Boeing to catch up with the rest of the supply chain as well as allow the tier one suppliers to ensure that all their respective work packages are appropraitely stuffed when shipped to Everett. However it will probably allow them to deliver only the 25 787 as they've indicated unless there is a significant improvement in the production rate (which would be necessitated by a steep learning curve on the 787 line). Once Boeing's 787 manufacturing technicians are fully up to speed on working on the 787 final assembly line as Boeing has intended (without any travelled work or any other engineering issues) then production can be ramped up to the 10/month or more.

Tuesday, August 12, 2008

787 Landing Gear Test and new 787 order coming soon?

Image Courtesy of Boeing

Dreamliner 1 started landing gear tests 3 days ago (August 9th). This is a major milestone confirming that the electrical, hydraulics and avionics systems are working together. Initially each gear (left main, right main and nose) were tested individually and then all were tested together. The gear swing tests is top replicate how the landing gear would work as if in actual flight. In order to do this, Boeing jacked the airplane off its landing gear. These tests will continue for the next few days presumably also testing the opening and closing of the landing gear doors as well.

Jon Ostrower is also reporting that Boeing will have a video available of the gear tests available soon. I'll try to post it here (once I've figured out how to do that)!

UPDATE: The video and more pics of the gear swing is here. Boeing even got some amazing footage inside the wheel well as the gear is retracted into it.

New 787 Customer?

In other 787 news, I learned from multiple sources that Boeing will reveal a buyer of 23 787-8s as early as next month. Boeing booked a 23 order from an unidentified customer back in January of this year. Since this order was booked, speculation has been rampant on the web that it must be a current customer who has already purchased the 787 and has a large number of options that they can exercised. Air Canada (who has 23 unexercised 787 options) became the prime suspect. The buyer was not revealed at Farnborough (I guess they didn't want to compete with all the other news coming out of the air show) but I have since learned that this order may be for a new 787 operator. I've also learned from sources that the customer is NOT a North American or European customer. One source told me that it probably is a company that is not subject to regulatory fillings where large material purchases such as 23 787 would have to be disclosed.

So who can it be? Well it can be an Asian, Middle Eastern or South American customer in my opinion. Those are the only regions of the world that have airlines that don't have to reveal this purchase in regulatory filings in addition to being able to afford to buy a large number of widebody aircraft and who has not previously purchased the 787. From these regions we could probably look at airlines like Thai, TAM, Emirates, Garuda Indonesia, Malaysian or even Iraq Airways (with the help of US govt. loans or the $49 bn surplus the Iraqi govt. has). One source speculated to me that TAM is going to take delivery of 4 777-300ERs in September and wouldn't the delivery ceremony make a great opportunity to announce a TAM order for the 787. This is a company that has already bought 12 A350-800, 10 A350-900 and 15 A330-200. The 787-8 would be a great size for TAM for which Airbus' only competitor in the 787-8 size category is the A330-200 (the A350-800 competes with the 787-9 and the A350-900 would compete with the 777-200ER and the proposed 787-10) and the 767-300ERs that TAM recently leased out.

Thursday, August 7, 2008

Flightblogger 787 Update, Part 3

Jon's final part reviews the progress on the 5 remaining 787 to be used in the flight test and certification program. Dreamliner 2, it seems, is going to really feel the effects of the travelled work because a lot of attention has been focused on getting Dreamliner 1 prepared.

Read Jon's report here.

Wednesday, August 6, 2008

Flightblogger 787 Update, part 2

Jon Ostrower continues his three part series this time updating us on the supply chain with particular emphasis on Global Aeronautica. GA seems to be the slowest cog in the wheel and it remains to be seen if they can sufficiently up the rates. It took them 11 months to send ouver the center section for Dreamliner 4 and it wasn't 100% complete but close.

They need to get up the learning curve and do it fast.

Read Jon's report here.

787 Brakes

Currently the only issue that stands between the 787 and it flying is the brake monitoring software (the labor issues notwithstanding).

Crane Co, GE, Smith and Boeing haven't really given a status update on this issue as of yet but it certainly doesn't mean that there hasn't been progress or not. Pat Shanahan has said that this issue is helping to eat up some of the schedule margin that the program has which cannot be a good thing. How much margin is left is unclear but in Jon Ostrower's blog, Boeing plans to have all hardware certified for safety of flight and ready to go for first flight by the end of the third week of August at the latest.

Now with the brake monitoring system.

The hardware is fine and the software has been written. Crane has to verify the software works and along with that Crane also has to collect all the documentation (and perhaps even prepare documentation) related to the brake monitoring software for Safety of Flight certification, in other words the system can't be used until the FAA know that it's safe even for flight testing.

According to Pat Shanahan (quoted in Jon's blog), everything except for the brakes will safety of flight certified by the end of the third week of August at the latest. When that will take place is a matter of speculation but my guess is around late August to mid September. It will probably go inside the 767 hanger for some final assembly activities and perhaps installation of some flight test equipment and then outside for ground testing.

Tuesday, August 5, 2008

Flightblogger 787 Update, Part 1

Jon Ostrower just posted a detailed update on the 787. It'll be in three parts with the first part here. The second part will deal with the supply chain and the last part will deal with Dreamliners 2 through 6.

There are two big issues between now and first flight: the brake monitoring issue and the labor contract negotiations with IAM. The later, in my opinion, represents the greatest risk to the 787 schedule. If there is a long strike then production could be significantly set back that delivering even 25 787s in 2009 will be very difficult. Boeing knows this and IAM leadership knows this and will be dealing from a position of strength. It'll be in Boeing's best interest to settle with IAM before Sept. 1st to ensure the 787 program continues uninterrupted.

Monday, August 4, 2008

Dreamliner 4 to start assembly soon

UPDATE: Another LCF just left Charleston with the main fuselage for Dreamliner 4. See it here.

The nose section for Dreamliner 4 should be in Everett later today thus setting the stage for the start of final assembly. The Dreamlifter is already in Wichita and has filed a flight plan to go on to Everett. No word yet on when the repaired main fusealge section is due in Everett but my guess is by tomorrow.