787 program gaining on production and testing efficiency improvments

Future profitability of the 787 program is going to be driven by production efficiencies both in final assembly as well as at the supplier level.  The drive for greater efficiency seems to be having positive results as 787 build times have reduced but also build quality has improved.

A way to indirectly track this is via the number of flight tests that each 787 conducts prior to delivery.  Usually with a mature program like the 777, the aircraft conducts a B-1 (Boeing) flight test to wring out the aircraft and look for any issues that may have occurred during production.  This is followed by a C-1 (customer) flight.  Flights for painting are not included.  Looking at this metric optically we can see that the number of flights that are flown has decreased to point that Boeing needs about 3 to 4 flight with a few needing as few as 2.  Clearly Boeing is trying to reach 777 level of program maturity and improving build quality will be important in the company’s ability to achieve that goal.

Additionally Boeing is also trying to achieve production efficiency which is going to be needed as Boeing eyes a rate increase early next year as well as closing the surge line and moving the three airplanes that are produced on that line to the main 787 lines in Everett and North Charleston.  The two main production lines need to be more efficient in order to handle the transfer of work which entails each line to produce 5 airplanes per month by the end of the year. Boeing plans to go to 12 per month in the first quarter of next year (Perhaps as early as January but I think February is more likely).

I am revising my 787 delivery estimate for June based on information from sources.  Earlier I had projected 14 787s will be delivered and I believe that they will now deliver 10 787s in June.  Boeing should roll out 11 787 from Everett and North Charleston this month.  The revised delivery projection includes 2 Etihad 787-9 (1 of which has just been delivered) however the other one has yet to conduct its first flight.  I still have no clarity on what the issues maybe on the Etihad aircraft and given that Boeing delivered one, I’m not inclined to believe that this has anything to do with Zodiac seat issues but barring any new information it is hard to speculate on what these issue(s) may be.  Boeing still has to conduct B-1 flights on 3 other 787s that are due to be delivered this month other than the aforementioned Etihad 787-9.

There was some good news reported by Guy Norris at AviationWeek.  He reported that the 787-10 is running ahead of schedule.  Reports are out via Aspire Aviation that the -10’s entry in to service is being pushed up to 1^st quarter 2018 versus the 2^nd quarter of that year.  Norris reports that they will have reached 90% of the detailed engineering release later this year.  The -10 is a simple stretch of the 787-9 and is expected to have 95% commonality with its shorter sibling thus simplifying spares and training expenses for airlines.  The aircraft is expected to start production in early 2017 when ZC001 (LN528) is assembled in North Charleston.  Thus far the -10 (like the -9) has had a trouble free birth and will probably be one of the stars of Boeing’s widebody lineup which brings us to my last topic of the post…..sales.

The 2015 Paris Air Show is right around the corner and while it is expected that Airbus will rule the airshow order book, Boeing will have a few announcements of its own.  There are several unidentified 787 orders that are on Boeing’s firm order book most of which are 787-9 orders.  Based on conversations I do see Boeing announcing the customers for some of these orders including 30 787-9 for Hainan Airlines (I believe that 24 to be purchased and 6 acquired on lease).  6 787-8s for Ethiopian which will be culled from the “terrible teens” is also expected to be announced.  Sources have told me that Qatar Airways, whose order of 30 787-8 will be filled by this time next year, may exercise the 30 787 options it has for the 787-10.  Beyond Paris other potential orders to look forward to include 100 x 787 from Emirates which would mostly be the 787-10 but would also include some 787-9 says Saj Ahmad of Strategic Aero Research.  He said that Emirates would possibly take up an additional 50 787 options to be exercised on any 787 model.  This order should be revealed at the Dubai Air Show in November.  QANTAS is expected to exercise the 50 787-9 options later this year.

Lastly, even though we're not quite to mid year it's not too early to look towards 2016 deliveries on a macro level. If, as expected, Boeing increases production early next year to 12/month. I do see Boeing having the potential to deliver around 143 787 including several "terrible teens."  This will be the year that the 787-9 will greatly out deliver the 787-8 by a margin of 3 to 1.  This equates to 107 787-9 deliveries and 36 787-8 deliveries.  This is not unexpected as Boeing has delivered, thus far, almost 56% of the total 787-8 order intake since the program inception while only delivering 5.5% of the total 787-9 order book.  Many observers are of the opinion that future 787-8 order will be limited as many airlines are gravitating to the 787-9 either as new orders or converting existing 787-8 order to the larger -9 and -10 models.  Barring a major improvement program for the 787-8 this trend may very well continue thus leaving the 787-8 size market to the A330-800NEO.

787 Full Production Table

787 Current Production Table

Delivered 787 List

787 Production and Delivery Trends

787 Monthly Delivery Tracking

Current 787 Operators

Total 787 Deliveries By Customer
2015 Projected Operator Deliveries
2015 Projected Customer Deliveries

787 Build Location By Operator 
787 Build Location By Customer