There was a little drama as I work up Thursday morning to an email from Google Blogger saying that they had deleted my blog. A number of readers emailed me about it and a forum topic on airliners.net was created. Here's the story. Bloggers automated systems accidentally flagged the blog a TOS (Terms of Service) violator for phishing. Well nothing can be further from the truth about this blog or my intentions. I appealed to Blogger to restore the blog which they had thankfully done but for a few hours I was faced with the disheartening possibility of loosing my archived blog posts though the 787 tables were unaffected and are still accessible if you had the URL. Lesson learned - I'm going to back up my blog posts. Now back to our regularly scheduled programming!
The 787 program made progress on the delivery front but it continues to be a drag on Boeing’s financial results. Notably, deferred production cost increased during the 1st quarter by $793mm to $26.9bn and increased 787 deliveries dragged down operating margins for BCA from 11.8% to 10.5% (because of the continued high cost of producing each 787 vs. the actual cash they have bought in is negative). While Boeing is still struggling to drive down 787 production cost, they expect to see a net profit on each unit produced sometime late this year and also reported that 787-8 unit costs over the last 190 787-8 deliveries declined 30% while 787-9 unit cost declines 25% over the first 20 deliveries. Boeing says that they expect deferred costs to start declining soon after they achieve rate break to 12/month which is expected to take place in late 2016.
When you look over that time frame (fourth quarter 2014 to 1st quarter 20015), we have seen improved performance. In particular, I noted on the 787-9, is they're coming down the learning curve in a very aggressive manner. And I think that goes to the lessons learned off the 787-8 in getting those into the production system. So that introduction of that airplane is going very well. And as you know, that will be close to half of our deliveries this year. So that smooth introduction is important.
Looking at 787 production at Everett and Charleston, it does appear that Boeing is making a drive to reduce assembly times as well as time to delivery. In reviewing the 787 tables we can see that the time in final assembly in Charleston is about 42 to 46 days while in 40-24 the assembly times is around 37 to 39 days. In 40-26 the final assembly times is much shorter..around 30 days. Post assembly times are also improving with Charleston airplanes taking about 40 to 50 days from the end of final assembly to delivery. At Everett the time is now ranging from 45 to about 75 but the more realistic time frame is about 60 days. Overall both locations are taking about 90 to 110 days to assembly, test, fly and deliver 787s though it appears that the numbers are trending down, particularly in North Charleston. Of course, delivery times is also driven by customer needs so while Boeing may be ready to deliver, the customer may not be.
A silver lining is that 787 deliveries thus far are more evenly spread out this month rather than being bunched up at the end of the month as is generally the case with 787 deliveries. This can only help reduce cost in the program as Boeing doesn't have to spend more money in overtime at month end trying to make deliveries to customers thus bunching up the aircraft deliveries in the last few days of the month. I do expect at least 5 more deliveries this month including 2 to American Airlines. To date Boeing has delivered 266 787s, 38 787s in 2015, and 8 in April. 22 787-9s were delivered thus far and I expect that the number of 787-9 delivered, which are higher margin aircraft, should increase dramatically this year.
Obviously Boeing deliveries numbers have been impacted by the production issues at Zodiac especially deliveries to American and Etihad. No doubt 787 delivery numbers would have been stronger without the Zodiac issue. Boeing doesn't expect the Zodiac problem to impact their delivery numbers for this year but the issue will persistent until the end of the 2nd quarter after which it is assumed that Zodiac would have its act together.
Lastly, Boeing's order book took a temporary hit when United Airlines, as expect, converted 10 787-9 to 777-300ER. Additionally, American Airlines deferred 5 787s that were to be delivered in 2016 to 2017(4) and 2018(1). American will now take 13 787s this year (3 already delivered), 8 in 2016, 13 in 2017 and 8 in 2018. United is expected to take 11 more 787-9s by the end of the 1st quarter of 2016.
A silver lining is that 787 deliveries thus far are more evenly spread out this month rather than being bunched up at the end of the month as is generally the case with 787 deliveries. This can only help reduce cost in the program as Boeing doesn't have to spend more money in overtime at month end trying to make deliveries to customers thus bunching up the aircraft deliveries in the last few days of the month. I do expect at least 5 more deliveries this month including 2 to American Airlines. To date Boeing has delivered 266 787s, 38 787s in 2015, and 8 in April. 22 787-9s were delivered thus far and I expect that the number of 787-9 delivered, which are higher margin aircraft, should increase dramatically this year.
Obviously Boeing deliveries numbers have been impacted by the production issues at Zodiac especially deliveries to American and Etihad. No doubt 787 delivery numbers would have been stronger without the Zodiac issue. Boeing doesn't expect the Zodiac problem to impact their delivery numbers for this year but the issue will persistent until the end of the 2nd quarter after which it is assumed that Zodiac would have its act together.
Lastly, Boeing's order book took a temporary hit when United Airlines, as expect, converted 10 787-9 to 777-300ER. Additionally, American Airlines deferred 5 787s that were to be delivered in 2016 to 2017(4) and 2018(1). American will now take 13 787s this year (3 already delivered), 8 in 2016, 13 in 2017 and 8 in 2018. United is expected to take 11 more 787-9s by the end of the 1st quarter of 2016.
787 Full Production Table
Total 787 Deliveries By Customer
2015 Projected Operator Deliveries
2015 Projected Customer Deliveries
2015 Projected Operator Deliveries
2015 Projected Customer Deliveries
787 Build Location By Customer
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