Sunday, November 12, 2017

Emirates Finally Pulls the Trigger: Orders 40 x 787-10 Dreamliners

Emirates Photo

In what many observers are characterizing as "surprising" Emirates Airlines order 40 787-10 Dreamliners to open the 2017 Dubai Air Show.  With this order, Emirates join the other two "ME" majors (Etihad, Qatar Airways) in ordering the 787 but the other major airlines in the region has also ordered the the 787 including: Saudi Arabian Airlines, Turkish Airlines, Royal Jordanian, El Al Airlines, Gulf Airlines, Oman Air, and the Republic of Iraqi (Iraqi Airways) with a possible EgyptAir order announcement coming later in the air show.

The order is for 40 787-10 and 60 options for any model of the 787.  What is not clear is if this is a firm order or not as industry analyst Saj Ahmad (see his article here) has reported that this is not firm while Boeing's press release says nothing about the status of the order and Emirates Tweet (see above) indicates that this is a firm order. 

There is no other way to view this order but as a huge victory for Boeing and a repudiation of Airbus' product strategy after Emirates ordered, then cancelled an order for 70 A350-1000.  Since that cancellation, Emirates has gone on to order 150 larger 777-9s and now the 787-10.  The airlines, at this time, is still negotiating for a possible 25 x A380 order but this order will most likely be viewed as replacement of the early A380s that were delivered instead of being used for expansion.  Emirates has indicated that both the 777-9 and 787s will be used for both replacement and expansion of their fleet and business.

With this potential 100 aircraft order for the 787 and the 150 777 order, it appears that Emirates is banking its future on Boeing products and in buying (potentially) aircraft from the 787-9 to the 777-9 they are covering a wide array of range and capacities that this product line offers.

Boeing wasn't done though and announced an order with Azerbaijan Airlines for 5 more 787-8 and 2 unidentified freighters.  I believe that these 5 787-8s was the unidentified order for 5 787s that Boeing posted last Thursday on their weekly orders.  By Thursday we should know if Emirates' order is firm or not.

Thursday, November 9, 2017

Boeing Grows 787 Order Book With Aid of Asian Orders Ahead of Critical Dubai Air Show

As we barrel ahead to the end of the year, Boeing is starting to get some significant traction on the sales front for the 787.  Just today they announced a "fake" order for 300 airplanes (fake because many of these orders were already announced or placed sometime ago) from China.  The order is made up of both widebody and narrowbody aircraft though numbers and types were not detailed in the announcement (hmmmm).  For sure some of these 300 airplanes are new orders but unfortunately we have no transparency into those details as of yet.

However, in the weekly order and delivery report Boeing showed additional orders for 13 more 787s - 8 x 787-9s for China Development Bank and 5 unidentified 787s for an unidentified customer.  Additionally Boeing showed that an unidentified order for 4 787-8s was for Japan Airlines though this announcement was made sometime ago.  Thus Boeing has 96 net 787s orders for 2017 and would need about 50 more to ensure a book-to-bill of under 1.  These orders also brings the total program order book to 1,296

777 Partners announced yesterday that they are resurrecting World Airways which folded about 3 years ago and is in negotiations with Boeing for 10 x 787s (they didn't announce a the sub-type).  These airplanes would be used to fly to Latin America and Asia from hubs in Miami and LA thus this is one potential order.

The other potential order is Garuda Indonesia finally completing their order for 30 787s though that will probably happen when Trump finally stops tweeting (never happening).

The potential for a major order comes starting Monday, November 13th with the start of the Dubai Air Show.  It's at this show where we can see possible 787 orders from the region's major airlines and lessors including Emirates, EgyptAir, and ALAFCO.  Given that Boeing is sending one of the test flight 787-10 (ZC002, LN 565, N565ZC) to Dubai World Central Airport, I'm willing to bet that there should be a significant order announcement(s) planned for the airshow next week with regards to the 787 (and 737MAX).  Stay tuned next week as I'll give order updates.

787 Spreadsheets

Thursday, November 2, 2017

787 Month End Report for October 2017

Testing Complete3
To be assembled in Everett140
To be assembled in Charleston108
Parts Arriving6
Undergoing final assembly9
Storage/Change Incorporation and Re-Work0
Change Incorporation and Re-Work0
Pre-Flight Prep13
Production Testing2
Non Customer Flight Tests4
Ready for Delivery3

Boeing starts the final final quarter of 2017 by delivering 13 787s in October but that is one shy of the expected 14.  It was expected that Boeing was to deliver ZD012 (LN 19, VP-CSC) this month but the delivery of the final early build 787-8 has not been confirmed as of yet and probably has not occurred.  Yet Boeing has been able to deliver 13 787 this month (2 x 787-8, 11 x 787-9) shows that Boeing is starting the sprint to the end of the year delivery goals for the 787.  This 13 airplanes included Air India's 27th and last 787-8 on order as well as Ethiopian Airlines' first 787-9 taken on lease from AerCap as well as QANTAS' first 787-9.  So far this year Boeing has delivered 113 787s (24 x 787-8, 89 x 787-9) and 613 since program deliveries began in September 2011 (348 x 787-8, 265 x 787-9).

Meanwhile inside the two 787 production facilities, rolled out 12 787s while starting assembly on 12. Of those 12 787s that started final assembly in October 3 were rolled out before the end of the month.  Compared to the 13 airplanes that Boeing delivered the production efficiency was.92 (13 deliveries/12 roll outs).  Charleston a little bit more efficient (.83) vs. Everett (1.0) this month.

During the conference call to discuss Boeing's 3rd quarter results, management reaffirmed the decision to raise 787 output to 14/month in 2019.  The 787 helped increase operating margins for the firm as it increased by 9.9%.  This was probably helped by the continued reduction in the deferred production cost for the 787.  In the third quarter the 787 deferred production cost dropped from $26.461 bn to $25.948 bn.  This equates to a quarterly reduction of $513 mm.  Still that is a huge number to bring down even though Boeing increased the accounting block by 100 airplanes.

The 787-10 program saw a huge reduction in the number of flights that were flown in October.  Though I'm not sure but I do believe that Boeing was focusing the program on ground testing of the aircraft.  I don't believe that Boeing is any near finished with flight testing the -10 and they're continuing to build 787-10 in concurrency with the flight test program so any changes that are mandated by the FAA will have to be incorporated into these early build 787-10 airplanes most of which are going to Singapore Airlines.

787 Spreadsheets