787 crowd Charleston Flightline

Over the last couple of months the number of 787s delivered from Boeing's North Charleston facility has shrunk compared to previous months and the effect has been an increasingly crowded flightline.  While I haven't pinned down the exact cause or causes for the delay in deliveries, it is curious that Boeing's Everett facility doesn't seem to be hampered when it comes to delivering 787s to customers.  That's not to say that there is something definitively wrong in North Charleston but the low number of deliveries from that campus is concerning.  There are currently about 16 787s at various stages of completion and testing along with 8 more that are in various stages of final assembly.

Already I have heard that there are seat supply issues but it may be more than that or engine issues with Rolls Royce Trent 1000 powerplants.  Boeing has been having supply chain issues and it's not just the 787 program but the other major commercial aircraft programs (737 and 777) that are effected.  This month I expect that Boeing will deliver 3 787 (same as last month) while rolling out 4 to 5 airplanes in August. One can easily see why the Charleston flightline has gotten very crowded in a short amount of time.  Unless Charleston deliveries pick up very soon, Boeing may have to look for new and innovative ways to store undelivered 787.

Paris Air Show 2017 - Day 2

Boeing had a another great day with orders and conversions for the 737 MAX 10 but a good number of orders for the MAX  8 also were announced.  The big conversion was United conversion of 100 737 MAX 8 to the MAX 10 plus adding a firm order for 4 more 777-300ER.

As far as the 787 order activity, Azerbaijan Airlines committed to 4 more 787-8s.  I believe that this maybe an unidentified order for 4 x 787-8s that Boeing booked earlier this year.  Okay Airways signed an MoU for 5 787-9s.  All told the 787 took in 47 orders announced at Le Bourget.

The big story continues to be Boeing order dominance over Airbus thus far at Paris especially with the 737 bringing in a pretty good haul vs. the A320.  However, Airbus may have a few more orders to announce in the last two days of the show.

Lastly, ZC001 flew back to Boeing Field today to continue certification flight test activities.


Boeing

AerCap - 30 x 787-9 (firm)

ALAFCO - 20 x 737 MAX 8 (MoU)

Avalon - 75 x 737 MAX 8 (MoU); 50 x 737 MAX 8 (options)

Aviation Capital Group - 20 x 737 MAX 10 (firm)

Azerbaijan Airlines - 4 x 787-8 (firm)

Blue Air - 6 x 737 MAX 8 (firm)


BOC Aviation - 10 x 737 MAX 10 (MoU)

China Aircraft Leasing Group - 35 x 737 MAX 8; 5 x 737 MAX 10 (firm)

CDB Aviation Lease Finance - 42 x 737 MAX 8 (MoU); 10 x 737 MAX 10 (including 6 conversions from 737 MAX 8 (4 MoU); 8 x 787-9 (MoU)

Ethiopian Airlines - 10 x 737 MAX 8 (MoU); 2 x 777F (firm)

GECAS - 20 x 737 MAX 10 (conversion of 20 737 MAX 8 orders - firm)

Japan Investment Advisor - 10 x 737 MAX 8 (MoU)

Lion Air - 50 x 737 MAX 10 (MoU)

Monarch - 15 x 737 MAX 8 (firm)

Norwegian - 2 x 737 MAX 8 (firm)

Okay Airways - 7 x 737 MAX 8 (firm); 8 x 737 MAX 10 (firm); 5 x 787-9 (MoU)


Qatar Airways - 20 x 737 MAX 8 (firm) + 40 x 737 MAX 8 options

RyanAir - 10 x 737 MAX 200 (firm)

SpiceJet - 40 x 737 MAX 10 (20 new (MoU), 20 conversions)

Tibet Financial Leasing - 20 x 737 MAX (8/10) (MoU)

TUI Group - 18 x 737 MAX 10 (conversion of 18 737 MAX 8 orders)

United Airlines - 100 x 737 MAX 10 (conversion from 737 MAX 8); 4 x 777-300ER (firm)

Airbus

Air Lease Corp. - 12 x A321neo (firm)

CBD Aviation Lease Finance - 30 x A320neo; 15 x A321neo (conversion)

Delta Air Lines - 10 x A321 (firm)

Ethiopian Airlines - 10 x A350-900 (firm)


GECAS - 100 x A320neo/A321neo (firm)

Viva Air - 15 x A320; 35 x A320neo (MoU)

ATR

Air Senegal - 2 x ATR72-600 (firm)

Tianju - 10 x ATR42-600 (MoU)


Xuzhou Jantong - 3 x ATR42-600 (MoU)

Bombardier

Ethiopian Airlines - 5 x Q400 (MoU)

PAL Express - 7 x Q400 (firm)

SpiceJet - 25 x Q400 (MoU); 25 x A400 options

Embraer

Belavia - 1 x E175 (firm); 1 x E190 (firm)

Fuji Dream Airlines - 3 x E-175 (firm)

J-Air - 1 x E190 (firm)

KLM cityhopper - 2 x E190 (firm)

Unidentified Customer 1 - 20 x E190-E2 (MoU)

Unidentified Customer 2 - 10 x E195-E2 (firm); 10 x E190-E2 options

787 has found favor amongst Chinese carriers after early bumps

As Boeing was ramping up the 787 (7E7) program early in the last decade, one of the prized target market was China. In January 2005 Boeing landed  a large order for 60 787s to be split amongst 6 Chinese carriers.  This was a coup for the 787 program and gave the young program a huge leg up on the competition.

However, as the 787 delays mounted, there were the inevitable cancellations including a large one of 24 airplanes by China Eastern Airlines of 24 787s in 2011 and a conversion of 3 787-8 by Xiamen Airlines into an order for the 737.

2005 Orders:

Air China - 15 787-9
China Eastern Airlines -15 787-8**
China Southern Airlines - 10 787-8
Hainan Airlines - 8 787-8
Shanghai Airlines - 9 787-8**
Xiamen Airlines - 3 787-8*

Total of 60 787s

* Cancelled on June, 2006
** Cancelled on October, 2011 (Shanghai is partly owned by China Eastern Airlines)

As the 787 program slowly got back on track the Chinese carriers had renewed interest in the Dreamliner. Hainan Airlines led the resurgent Chinese interest in 787 by ordering 30 787-9 plus taking additional -9 on lease from Air Lease Corp and AerCap. Xiaman re-ordered the 787-8 and added the 787-9 which will start deliveries later this year.  China Eastern also re-ordered the 15 787 they cancelled earlier this time taking the 787-9.  Riuli Airlines, a smaller carrier just signed on for 6 787-9.  All told, the Chinese 787 order book is now 98 direct purchased Dreamliner plus a number of additional 787s that will be taken up from lessors.  After deliveries are all said and done, Chinese carriers could account for at least 10% of the total 787 order book which currently stands at 1,161

2016 Orders

Air China - 15 787-9 (6 delivered)
China Eastern Airlines -15 787-9***
China Southern Airlines - 10 787-8 (10 delivered)
Hainan Airlines - 10 787-8 (10 delivered); 30 787-9 (4 delivered)
Ruili Airlines - 6 787-9
Xiamen Airlines - 6 787-8 (6 delivered)****; 6 787-9

***China Eastern re-ordered the 15 787 this time taking the 787-9
****Xiamen re-ordered 6 787-8 in May 2011 and finalized the order in August 2013

Boeing-Iran deal....no 787

A little more detail came out regarding the proposed commercial aircraft deal between Boeing and Iran.  There are no 787s in the deal but here is the breakout:

Direct purchase:
4 x 747-8I
15 x 777-9
15 x 777-300ER
6 x 737 NG
40 x 737MAX

Lease:
29 x 737 NG

In an unrelated note to follow up my previous blog post.  ZB416 (LN 447, JA880A) will fly its C-1 flight on July 21st after returning from Farnborough.  The aircraft is due to be delivered on July 26th.  Thus it appears Boeing will deliver 14 787s this month, not 15.

Boeing, Iran Air signs a MoU; Boeing starts practices for the 787 demonstration at Farnborough

	Number
Testing Complete	2
To be assembled in Everett	133
To be assembled in Charleston	92
Parts Arriving	6
Undergoing final assembly	10
Storage	0
Storage/Change Incorporation and Re-Work	1
Change Incorporation and Re-Work	6
Pre-Flight Prep	11
Production Testing	11
Non Customer Flight Tests	1
Ready for Delivery	4
Donation	3
Delivered	422
TOTAL	702

Boeing confirmed that they have signed an MoU to supply commercial aircraft to Iranian airlines.  The confirmation is understandably short on specifics since any deal has to go through the US Treasury for approvals as well as the Iranian government.  According to news reports the order involves at least 100 aircraft with some reports that it's a mix of 737s and 777-300ERs though there was one report that said the order may also involve 747-8Is.  Interestingly this order is supposedly for flag carrier Iran Air.  There is no word on aircraft orders for other Iranian airlines and more importantly, the media reports makes no mention of 787s being part of the MoU even though Boeing reportedly offered the aircraft.  It doesn't necessarily mean that it won't be ordered.

It's hard to get excited about this order as there are still many complications and steps before we see a 787 in Iran Air colors rolling out of the paint hangar, namely US government approval, continued political tension between the two countries, current US sanctions which places restrictions on financing and banking activity with Iran and needed in order to effectuate the final sale and delivery. Consequently, finalization of any Boeing deal with Iranian airlines will take several months to be completed, perhaps not until early next year.

Deliveries are progressing this month with 5 delivered through yesterday, June 21st.  Boeing is still on track to deliver 14 to 15 787s this month.  It could hit 15 if  they deliver ZD004 (LN 12, ET-ATL) to Ethiopian (long pole in the tent here is financing of delivery payment) and ZB416 (LN 416, JA880A).  The later has started flight practicing the aerial demonstration that it will perform at Farnborough next month.  The practice is taking place at Grant County Airport in Moses Lake.  I'm not sure if it will be delivered prior to month end or after the air show.  Right now, my latest intelligence has it being delivered by the end of this month but it has had its customer flight but I'll try to find out if the schedule has moved.  If you can't make it to Farnborough this year, here's video shot yesterday by #Avgeek OwnsGermany.

Video by OwnsGermany on You Tube

With the start of the major air show less than a month away There are a number of unidentified orders that will probably be announced including one UFO order that is already known (China Eastern Airlines for 15 787-9s).  

Qatar Airways is expected to take its 30th and final 787-8 on July 13th which is during the Farnborough Air Show even though its been ready for some weeks now.  I think the delivery was deliberately pushed to time with a possible air show announcement with Boeing.  My guess is that Qatar will announce the exercise of the 30 787 options at that time to coincide with the delivery of 787-8 number 30.

Lastly,  Boeing started final assembly on American Airlines's first 787-9 5 days ago on June 17th and yesterday they started final assembly on the first of 2 787-8s for Uzbekistan Airways.  There should be two more deliveries today, a 787-9 each to Air China (ZB49, LN 435, B-7879) and British Airways (ZB372, LN 442, G-ZBKK).  There are still 6 aircraft that have to have there C-1 flights if they're to be delivered this month.  Those flights, per the most current information that I have, should be conducted tomorrow and Friday.

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
2016 Projected Operator Deliveries
2016 Projected Customer Deliveries
2015 Projected Operator Deliveries
2015 Projected Customer Deliveries

Paris Air Show 2015 - Day 2

Boeing's order book exploded with a number of 737 orders that were announced today.  Airbus posted three orders, the largest coming from Korean Air for 30 x A321neo.  Still there are two more full days for all the commercial manufacturers to make a splash.  So far the only major manufacturer that has been quiet is Bombardier with the C-Series.  Coming on the heels of news that their aircraft is beating weight and performance specs, the company still hasn't posted a sale for the CS100 or CS300.

On the 787 front there were no new orders but there was an apparent cancellation by Aeroflot for the 22 787s that they ordered a few years back.  Apparently things have "changed" and they no longer needed the aircraft.  Given the political climate between the US and USS...er...Russia this is hardly a surprise.  No word on their orders for the A350 and if they're going to be cancelled.  I do believe that the slots that Aeroflot has given up can be quickly filled given the demand for near term delivery slots for the 787.

One bit of positive news is that ALC will be leasing 10 787-10 to Vietnam Airlines thus complementing their 787-9s.  I'm hoping that tomorrow will give us some positive 787 news but as always, watch this space or follow me on Twitter as I'd retweet information coming out of Paris.

Boeing

AerCap – 100 x 737 Max 8 (Firm)

Eva Air – 5 x 777F (LoI)

Garuda Indonesia – 30 x 787-9, 30 x 737 MAX (LoI)

Korean Air – 30 x 737 Max 8 (LoI), 20 x 737 Max 8 (Options), 2 x 777-300ER (Firm)

Minsheng Financial Leasing – 30 x 737 Max and NG (MoU)

Qatar Airways – 10 x 777-8X (Firm), 4 x 777F (Firm)

Ruili Airlines (through AVIC Leasing) – 30 x 737 Max (LoI)

SMBC Aviation Capital – 10 x 737 Max 8 (Firm)

Sriwijaya Air – 2x 737-900ER (Firm), 20 x 737-800 (Options)

Airbus

ALC – 1 x A350-900, 1 x A321ceo, 3 x A320ceo

Eva Air – 4 x A330-300ceo (MoU)

Korean Air – 30 x A321neo (Firm), 20 x A321neo (Options)

Garuda Indonesia – 30 x A350 (LoI)

GECAS – 60 x A320neo (Firm)

Peach Aviation – 3 x A320ceo (Frim)

Saudi Arabian – 20 x A330-300, 30 x A320ceo (Firm)

ATR

Air New Zealand – 1 x ATR42-600 (Firm)

Braathens Aviation – 5 x ATR72-600 (Firm), 10 x ATR72-600 (Option)

Cebu Pacific Air – 16 x ATR72-600 (Firm), 10 x ATR72-600 (Option)

Japan Air Commuter – 9 x ATR 42-600 (8 Firm, 1 option)

BahamasAir – 3 x ATR 42-600, 2 x ATR 72-600 (Firm)

Binter Canarias – 6 x ATR 42-600 (Firm)

Bombardier

WestJet Encore – 6 x Q400

COMAC

Ping An Leasing – 50 x C919 (LoI)

Puren Airlines – 7 x C919, 7 x ARJ21 (LoI)

Embraer

Air Castle – 30 x ERJ-190E2 (15 Firm, 15 Option), 30 x ERJ-195E2 (15 Firm, 15 Option)

Colorful Guizhou Airlines – 17 x ERJ-190 (7 Firm, 10 Option)

Skywest – 8 x ERJ-175 (Firm)

United Airlines – 28 x ERJ-175 (Firm)

Superjet International

Yakutia Airlines – 3 x Superjet 100LR (Firm)

Boeing talks 787 during Investors Conference

During yesterday's Investor's Day conference, Boeing addressed the 787 and the ongoing issues still facing that program.  While the tone was upbeat, the theme was risk and cost reduction throughout the 787 program. Boeing stated that they are continuing to de-risk the 787 program because of the maturity and stabilization of the production system.  However, my concern with that it is not only the stabilization of the production system that needs to occur but improvement in build quality of the 787.  Currently it appears that it takes Boeing about 100 to 110 days from the start of final assembly to delivery of the 787 though there are outliers both under 100 days and over 110 days.  While I do not have any comparable numbers to another program like the 777 it is, without a doubt, crucial that this metric is going to be key to improving efficiencies, de-risking the program and improving margins that Boeing is looking to accomplish with the 787.  Boeing CFO, Greg Smith, stated that the 787-8 has improved unit cost by 15% over the last one year and final assembly flow time improved by 10% during the same period.  The 787-9 has seen both unit cost and flow time improve by 30% since the first unit entered final assembly last year.  So it does appear the final assembly flow time is coming down but again build quality is still going to be important going forward and Boeing has not addressed.


During the conference Jim McNerney addressed the need to do a 757 replacement and he gave a clear indication that the replacement will not be a clean sheet design but a using one of the current platforms that Boeing has designing a derivative to fulfill that need.  He did specifically mention the 787 as one of the those platforms (in addition to the 737).


Boeing is also looking to leverage the highly successful development of the 787-9 for the 787-10.  Approximately 90% of the 787-10 will share commonality with the 787-9 thus greatly reducing the development cost of that aircraft.


In terms of service reliability, Boeing states that they are hitting around 98 to 98.5 but want to be well into the 99% range (99.5%) but are not there yet.  They haven't stated on how they're going to get there and the reliability rate really in unchanged from the last reported rate which Boeing gave during their 1st quarter earning report.


On the production front, Boeing is about to increase the rate at Charleston from 2/month to 3/month.  This rate break should occur around early to mid July and we would also see a commensurate reduction in the rate at Everett from 8/month to 7/month.  Boeing is confident that they can now do this as the production system is stable despite the issues with the mid-body fuselage build in 88-20.


Charleston will also start assembling the 787-9 starting around November of December for delivery in the first quarter of 2015.  As for the remainder of the year see my spreadsheets for the 2014 78 delivery projections.  I'm still agreeing with Boeing's guidance for 110.  I believe 11 of these will be 787-9s.


Lastly, it appears that Boeing may have completed F&R/ETOPs testing for the Rolls Royce powered 787-9.  ZA197 (LN 146, JA830A) flew back to Everett last night and it may have to go through a short period of re-work before being delivered to ANA.  Air New Zealand should get the first one around late June to early July with United expected to receive their first 787-9 in mid to late July.  787-9 flights have slowed noticeably in the last week so I believe that Boeing is close to if not finished with flight testing.


Full 787 List

Current 787 Production List

Delivered 787 List

787 Monthly Delivery Tracking

787 Customer Delivery

787-9 Flight Test Hours

Current 787 Operators

Projected 2014 787 Deliveries



 

Boeing gives upbeat assessment of 787 during earnings call

 During the 1st quarter 2013 earnings call, Boeing CEO Jim McNerney gave an upbeat assessment of the 787.  Despite the lack of 787 deliveries in the past quarter Boeing's earnings managed to stay strong given increased deliveries of the 737 and 777.  Now that the FAA has given approval to the lithium ion battery fix Boeing is prepared to resume deliveries around early May.

Among the information on the 787 that was passed along during the call were:

• Installation has begun on 10 in service 787 and 9 production aircraft thus far.
• Boeing initiated  a rate break to 7 aircraft/month.
• All engineering work on the 787-9 is completed.  Final assembly will start by mid year (I'm expecting very late May. First flight this fall and first delivery in the first half of 2014.
• 787-10 interest remains very high and Boeing anticipates formal launch "soon."  With delivery slots sold out Boeing may have to look at a further increase in the 787 production rate beyond 10/month and this issue is currently under evaluation.  The rate must be stabilize at the 10/month before consideration of a rate increase beyond that rate.
• Travelled work is close to 0 and part shortages are minimal.
• Most of the battery work should be completed by mid May on the in service 787s.
• The per unit cost of producing each 787 has come down 60% from LN 8 to LN 100.
• Boeing is maintaining its delivery guidance of more than 60 787s this year and said that 15% to 20% will be delivered in the second quarter.

Assuming a delivery goal of 65 787s this year this would mean that Boeing is planning to deliver between 10 and 13 787s by the end of June. It is possible to get a better idea of the total deliveries for this year when the number of deliveries during the 2nd quarter is known.

 

Tornadoes hit Boeing Defense plant and Spirit's plants in Wichita, production of 787 and 737 uncertain

Boeing was dealt a body blow on Saturday when tornadoes ripped through Wichita and severely damaged Boeing's BDS plants as well as the plants for Spirit AeroSystems 737 and 787 operations.

Thankfully there weren't any injuries or fatalities but production of 737 and the forward fuselage of the 787 may be severely impacted due to the power outage and damage caused by the storm.

Right now Spirit is telling employees not to report for work through Tuesday as they are still conducting damage assessments. Spirit is just one of a handful of Boeing 787 suppliers that have had very little issues with producing their work share of the 787. This could set Boeing back though if it does and by how much is still uncertain though Spirit is saying most of their capabilities are still intact. I don't know what they mean by capabilities.

From the photos that Spirit had posted on Flickr, the damage at least externally, looks to be pretty severe. I will try to follow this and report what impact, if any, these tornadoes have on 787 production.

787 officially starts earning revenue; Boeing drops 787/747 delivery forecast for 2011...again

787 Entry into Service

The 787 Dreamliner officially entered into airline revenue service with ANA flight 7871 flying from Narita, Tokyo to Hong Kong's Chek Lap Kok International Airport. The start of revenue service allows the opportunity to hear about the passenger experience from those not connected to the airline or to the manufacturer. Initial passenger reaction has been very positive especially with the dimmable windows as well as the noise level of the aircraft. One of Boeing's aims was to greatly improve the passenger experience while on board the airplane and it seems that they have accomplished just that. Overall this is a very promising start the the 787s service life though it's only one flight. Boeing has prepared for this day over the course of 7 years and with the delays have aimed to mature many of the systems that are on the 787.

Orders and Deliveries

the last month has been a mixed bag for Boeing in terms of orders and deliveries for Boeing. They did deliver the first two 787s to ANA and has supported the airline's efforts to put the airplane into service but the news from the order's front does dampen some of the enthusiasm stemming from the start of deliveries. China Eastern Airlines has cancelled their order for 24 787s and has decided to take 45 737s. Boeing has since said that they expect more cancellations though they would give a number. One of those might be a partial cancellation by Air India. The financially troubled airline which is run by government bureaucrats instead of airline executives, has concluded that they ordered too many aircraft when they placed a huge widebody order with Boeing in 2005. They want to cut the 787 order by more than half to 12 airplanes from the original 27 that they have on order. Presumably Boeing and Air India have entered into discussions about the 787 order but currently Boeing has several 787 already built and undergoing change incorporation. Two of them also have engines hung.

ANA did announce that they expect to have 7 Dreamliner's delivered to them by the end of the year (thanks to Flightblogger for Tweeting that particular bit of news). This bit of news is very interesting given Boeing's announcement this morning that they will deliver 15-20 787s and 747-8 this year. The reason for the reduction in estimated deliveries is due to the amount of time needed for change incorporation. During the earnings conference call, Boeing estimated that about 2/3 of this range will be 747-8 deliveries and the rest 787-8. This two pieces of information indicates that Boeing will probably deliver 5-8 787 (with 8 being the more likely number) and 10-12 747-8. Of the 8 787s delivered, I believe there will be 7 going to ANA and one GEnx aircraft possibly to Air India. Given the dynamics of the Air India situation and the pace of re-work on the $18bn of 787 inventory sitting at Everett, the number delivered will be very fluid.

I have received information that as of now Boeing is not planning any 787 deliveries for November though that may change. A reasonable measure of how close a 787 is to being delivered is when the aircraft has been fitted with its engines. Currently only a handful of 787s have their engines attached including two that were flown to Boeing's facility at Lackland Air Force Base in San Antonio, Texas. There are probably three other airplanes that I know of that have engines attached (LN 31, LN 35 and possibly LN 38). There are 5 other airplanes including 3 for ANA that are in the Everett Modification Center (EMC or otherwise known as ATS) that are undergoing re-work and could quite possibly have their engines on. These are later build airplanes (LN 40, LN 41, and LN 42) which don't require much re-work to be ready for service. It is quite possible that these airplanes would be ready for delivery in late November to December. Other airplanes that would be ready for delivery include LN 7 and LN 9 which was used for Boeing's ETOPs and F&R testing.

Speaking of re-work, Boeing is reporting improved build of parts that are flowing into Everett and they are projecting that the production system will reach a point where most if not all change incorporation will not be needed by airplane 60.

Production and Testing

First the testing update. Boeing reported that the testing program on the GEnx-1B powered 787 is well into the F&R/ETOPs phase and overall they are 95% complete with testing of this model. ZA006 is the only aircraft that is dedicated to F&R/ETOPS testing as Boeing is not using a production standard aircraft for this testing (they probably convinced the FAA that it is not necessary to use a production standard aircraft for some reason).

Additionally, ZA004 which has been conducting flight tests with the Trent 1000 package "B" engines has probably wrapped up most of the flight testing (it has not flown since Oct. 19) though I don't know if they have to do ETOPS/F&R testing using the modified engines or not. Boeing is planning to deliver the first 787 equipped with the package "B" Trent 1000 sometime in December as it will be these 787s that ANA will start using on long haul international flights.

Now on to production. Now that Boeing has most of the 787-8 flight testing and development out of the way, they can proceed with focusing on reducing inventory ($18bn now) and ramping up assembly. Certainly having the North Charleston line open will help but right now many of the techs there are building LN 46 very slowly as they are in the process of learning their job. However, Boeing needs to clear the 40 some odd 787s that are listed as work in process (WIP). 38-39 are at Everett while two more are at San Antonio. Change incorporation is going slowly especially with the early build aircraft that I anticipate that most of the WIP aircraft won't be cleared until late next year. However Boeing did announce that they will be increasing the 787 production rate to 2.5/month starting this week (I'm projecting this Sunday) starting with LN 50 which is for Ethiopian Airlines. It seems that Boeing is planning for another rate increase very soon after going to 2.5 as they are reporting that the supplier base is positioned for further rate hikes very soon though timing and rate of these increases is still a matter of speculation. I'm thinking that Boeing can increase the rate to 3 or 3.5 by February. Boeing is still reiterating their position that they will be able to produce 10 787/month by the end of 2013. After that rate has stabilized over a course of 1 to 2 years Boeing sees that 787 unit revenue will exceed unit cost by around 2014-2015. The program won't be profitable after about 10 years of production. They have now set their accounting block for the 787 program at 1,100 units (they are spreading all development costs across 1,100 airplanes). Of course this is all predicated on Boeing reaching the 10/month goal by the end of 2013.

Boeing and Rolls Royce move to put Trent 1000 issues behind them

Boeing and RR execs are meeting today and tomorrow to review the way forward with the Trent 1000 after the uncontained failure in early August.

In an article on Bloomberg News, Rolls Royce will be presenting Boeing 787 executives with their plan to fix the Trent that would not put the first delivery, scheduled for mid February 2011, in jeopardy. Boeing, presumably knowing some of the general facts of the plan said that they believe they will be ok after getting the detailed briefing.

Susanna Ray: Boeing Scrutinizes Rolls Recovery plan for 787 Dreamliner Jet

Lastly, Dominic Gates of the Seattle Times, has an article out talking about the 787, 747-8 problems and the re-engining of the 737.

Dominic Gates: Albaugh hopeful on engine fixes for delayed 787

Tidbits from the Boeing Investors Conference

Here are some main points from today's Boeing Investor's Conference

• 787 sold out beyond 2012
• 737 Sold out through 2012
• 787 facility in Charleston will be self sufficient
• Use 787 earnings toward 737 successor/re-engine and 777 improvements/777NG
• Expect 787 margins to grow over time
• 787 production model is the future just need to get it right
• Commercial aircraft orders for Boeing to be better this year vs last year
• 787 has not flown as many hours as they had hoped to have at this point but efficiency of flights are high
• 747-8 TIA to be in hand in a few days
• Talking to customers about either re-engining the 737 or building a whole new airplane
• Improved on 787 final assembly costs; take out about half the cost of final assembly for airplanes 7 to 21
• 747-8I has 70% of detailed engineering completed
• Boeing adds a fourth 747-8F to the flight test program
• 737 plans to be announced this fall
• 787-9 final configuration this fall; start final assembly of first 787-9 in 1st quarter 2012
• Reducing weight on the 787-9; hope to have it fly 8,150 nautical miles
• Plan to incorporate -9 weight savings into the 787-8 to improve that airplane
• Boeing completed 1,450 test conditions on the 787 flight test; retired a significant amount of risk
• No major changes required on the 787
• Boeing has a day to day plan to finish test flight and achieve certification
• Boeing needs less than 90 hours/month per aircraft of flight time to certify the 787
• ZA100 power on planned for summer
• 787 is aerodynamically stable no need to change the outside lines
• Boeing has already flown or tested extreme conditions on the 787
• 5th 787 to fly in the next few weeks (ZA005)
• Boeing now transitioning from testing phase to demonstration phase
• Seeing improvements in production and in the supply chain
• Boeing will see almost a 70% increase in completion between airplane 23 and airplane 16
• 50 pilots have flown the 787
• Shear tie issue not a huge concern; did not drive the decision to halt deliveries to Everett
• GEnx-1B powered 787 to be certified in 1st quarter of 2011
• Submittal of FAA required docs and testing to be done before November for certification purposes.

If anyone had listened to the conference and wishes to add anything significant, please contact me.

UA/CO Merger - My take on it's future fleet

With so much to take in with the UA-CO merger here's my quick take on their fleet composition...at the end of the day United is going to have a mix fleet of Boeing and Airbus. They'll keep the 787NG and the A320s in their fleet and I expect that all the current narrowbody orders will be kept intact.

I do think however that between the two fleets there will be a change in the widebody orders that are currently on the books.There are still 3 777-200ERs (for CO) as well as the the 787s and A350s:
3 x 777-200ER (CO)
36 x 787-8 (25 UA and 11 CO)
14 x 787-9 (CO)
25 x A350-900 (UA)

I do think that there may be too many widebodies on order here for both carriers combined and thus some part of this total order is going to be cancelled. Given that the 787-8 is going to be the prevalent type (CO/UA will be taking delivery starting next year), I think the A350 order will be cancelled and maybe some 787-8s. I think the new UA will be taking at least 25 787-8 and all the 787-9. They may even opt for more 787-9s.

As far as the narrowbodies are concerned. Look for UA to continue to take delivery of the remainder of the 737/A320 orders but after that the airlines is going to wait and see what both manufacturers turn out in terms of the either the re engined narrowbody or next gen narrowbody. UA might even opt for the C-Series.

Flightblogger: Boeing to start 737 and 777 Advance Product Development

Flightblogger is reporting that Boeing is launching two teams to study advance product development for both the 737 and 787.

The 737 Advance Product Development Team wil be headed by Mike Bair and the 777 Advanced Product Development Team will be headed by Lars Anderson.

Here's Boeing's Press Release:

Boeing Commercial Airplanes Leadership to Focus on Execution Today and Into the FutureRealignment of Leaders Brings Enhanced Functional Excellence, Future Growth

SEATTLE, Jan. 28 /PRNewswire-FirstCall/ -- Boeing (NYSE: BA) Commercial Airplanes President and Chief Executive Officer Jim Albaugh today announced organizational changes intended to strengthen the company's focus on both performance and long-term strategy.

"Our priorities for 2010 and beyond are clear," Albaugh said. "We must execute on our 787 and 747-8 development programs; we must continue to perform on our ongoing production programs; and in this increasingly competitive world, we must develop a clear vision and roadmap for both the single-aisle and twin-aisle marketplaces.

In a move to strengthen processes, tools and functional excellence, Albaugh announced the following appointments:

Howard Chambers will lead a newly created Commercial Airplanes function, Program Management, which will focus on the development of program-management skills and drive enterprise-wide best practices throughout the organization. He most recently was vice president and deputy program manager, 787 Program.

• Tim Copes was named vice president, Manufacturing and Quality, reporting to Ray Conner, vice president and general manager, Supply Chain Management and Operations. Copes most recently was president, Shared Services Group, for The Boeing Company.
• John Cornish was named vice president, 787 Final Assembly, reporting to Scott Fancher, vice president and general manager, 787 Program. Cornish most recently led Commercial Airplanes' Manufacturing and Quality organization.
• Mike Delaney was named vice president, Engineering, Boeing Commercial Airplanes. He has extensive engineering experience with all five Commercial Airplanes programs, including spending the last two years as 787 chief project engineer.

Albaugh also announced moves intended to strengthen execution of ongoing Boeing programs, including:

• Dan da Silva was named vice president, Freighter Conversions, reporting to Dennis Floyd, vice president, Technical Services, Commercial Aviation Services. Da Silva most recently was vice president, Sales and Marketing, Commercial Aviation Services.
• Stan Deal was named vice president, Supplier Management, reporting to Ray Conner, vice president and general manager of Supply Chain Management and Operations. Deal replaces Steve Schaffer, who will retire April 1 after 36 years with the company. Deal most recently was vice president, Sales, Asia-Pacific for Commercial Airplanes.
• Elizabeth Lund will become vice president and general manager, 767 Program, reporting to Pat Shanahan, vice president and general manager, Airplane Programs. Lund most recently was vice president, Product Development.
• Beverly Wyse was named vice president and general manager, 737 Program, also reporting to Shanahan. She replaces Mark Jenkins, who recently announced his retirement after 35 years at Boeing. Wyse most recently was vice president and general manager, 767 Program. She will continue to support the U.S. tanker program.

Albaugh made further executive changes intended to stimulate future growth, saying in a message to employee message Thursday, "Defining Boeing's airplane product strategy is critical to our future growth. We need a clear vision and roadmap for both our single-aisle and twin-aisle offerings for the future. Also, in the global environment in which we operate, we need a sharpened situational awareness of macro-economic and geopolitical realities".

• Nicole Piasecki will lead a new BCA Business Development function responsible for the overall integration of strategic planning and analysis critical to maintaining Boeing's long-term competitiveness. She previously was president, Boeing Japan.
• Mike Bair will lead a newly created Advanced 737 Product-Development team, which will be responsible for planning the future of Boeing's single-aisle offering. Bair most recently was vice president, Business Strategy and Marketing, Commercial Airplanes.
• Lars Andersen will lead a new Advanced 777 Product-Development team, which will be responsible for Boeing's large twin-engine, twin-aisle airplane program. Andersen served in a number of key roles on the 777 program, culminating in seven years as vice president and program manager. He retired in 2007, and returns as a consultant.
• Marlin Dailey, vice president, Sales, Commercial Airplanes, will lead an expanded team that also includes product marketing and market analysis.
• John Wojick was named vice president, Sales, Asia Pacific, replacing Deal. Wojick most recently served as vice president, Sales, Leasing and Asset Management.
  

Additionally, Albaugh announced the following moves:

• Mike Denton will become president, Boeing Japan, reporting to Boeing International President Shepherd Hill. Denton most recently was vice president, Engineering, Boeing Commercial Airplanes. He will relocate to Tokyo.
• Ray Conner, vice president and general manager, Supply Chain Management and Operations, now has full responsibility, accountability and authority for the entire Boeing Charleston site.

"I have learned a lot during my first five months at BCA," Albaugh said. "This is an outstanding team achieving great things together, and we ended 2009 with a strong quarter, exceeding our forecast for operating cash and profit. Today's announced changes are intended to make the BCA team even stronger to meet current challenges and stay focused on the opportunities ahead."

747-8I Gets a boost from Korean Air

Boeing Image

Boeing and the 747-8 program got a boost from an important Asian customer, Korean Air, when they signed an MoU (the deal is not finalized and won't appear on Boeing order tally until it is finalized) for 5 747-8I. These 747s will be delivered between 2013 and 2015 and will complement the 747-8F that Korean also will operate. Lately, Korean Air has been a huge Boeing customer with orders for the 787, 777-300ER and the 737. Now with them ordering the 747-8I they are committed to Boeing entire widebody line up. They also have 10 A380s on order.

Boeing's Press Release:

Boeing, Korean Air Announce Order for New 747-8 Intercontinental Five airplanes worth $1.5 billion at list prices

SEATTLE, Dec. 4 /PRNewswire-FirstCall/ -- Boeing (NYSE: BA) and Korean Air today announced an order for five 747-8 Intercontinental jetliners. Korean Air is the first Asian airline to order the passenger version of the new, fuel-efficient 747-8.

The airplanes have a total average list price value of $1.5 billion. Korean Air already has arrangements to operate seven 747-8 Freighters.

"This is a great day in the history of our long and enduring partnership with Korean Air," said Jim Albaugh, president and CEO of Boeing Commercial Airplanes. "The technologically advanced 747-8 Intercontinental is particularly well suited for Korean Air's operations. It will provide exceptional levels of passenger comfort, greatly enhanced fuel efficiency and reduced emissions and noise. The announcement comes at an exciting time as we move closer to the first 747-8 Freighter flight in early 2010."

Korean Air plans on flying the 747-8 Intercontinental on long-haul routes to the Americas and Europe.

"The 747-8 Intercontinental fills the void between the 300- and 550-seat airplanes in our future fleet," said Won Tae Cho, managing vice president of Korean Air Passenger Business Division. "The technological enhancements Boeing has made to this airplane will deliver exceptional economics and a flying experience that will thrill our customers, enabling Korean Air to provide Excellence in Flight to our customers."
The new 747-8 Intercontinental is stretched 18.3 feet (5.6 m) from the 747-400 to provide 467 seats in a three-class configuration, an additional 51 seats. It also offers a range of 8,000 nautical miles (14,815 km). Using the new GEnx-2B engines, the 747-8 provides airlines a quieter, more fuel-efficient airplane. The 747-8 also provides nearly equivalent trip costs and 13 percent lower seat-mile costs than the 747-400, plus 26 percent greater cargo volume.

The 747-8 also features a new wing design and an upgraded flight deck. The airplane interior incorporates features from the 787 Dreamliner, including a new curved, upswept architecture that will give passengers a greater sense of space and comfort, while adding more room for personal belongings. The architecture will be accentuated by lighting technology that provides smooth transitions for a more restful flight.

The 747 program is in the later stages of the 747-8 Intercontinental design phase. Assembly on the airplane is set to begin around mid-2010, with the first delivery of the freighter version scheduled for the fourth quarter of 2011.

With the addition of the Korean Air order, Boeing has secured 110 orders for the 747-8. Thirty-two of the orders are for the 747-8 Intercontinental, and the remaining 78 are for the 747-8 Freighter.

Where does Boeing go from here?

Ok now that there is a tentative deal with IAM 751 with Boeing let's take a look at what happens here on out. First the IAM membership has to ratify the contract that it's leadership has unanimously endorsed to it's members.

Look for ratification by the end of this weekend at the very latest and the return to production very soon after that. I would say that Everett and Renton would be back on line before election day. at the latest.

Next up...SPEEA and those contract negotiations. While it is hard to predict, I do think that since SPEEA and IAM were coordinating to a point there efforts against Boeing management that the contract that was negotiated with IAM will essentially be the same contract that is presented to SPEEA and will be likely accepted by SPEEA. With the financial markets and the global economy in a tailspin it will not be in SPEEA's interest to go out on strike especially when Boeing gave a very good contract to IAM. I think this contract was aimed at both SPEEA as well as IAM and it will probably be enough to avoid and engineers strike on December 1st.

Now looking ahead to the 787, it is a pretty much a no brainer that the 787 first flight will not take place before December 31st, 2008. There is still plenty of work to do but let's assume that the work stoppage is ultimately 60 days (2 months) and add in 10 days for unknown unknowns, then first flight can possibly take place 70 days after the machinists return to work. I'm assuming that they return around November 1st so it is possible for the 787 first flight to take place as early as January 10th, 2009. But this is all dependent on many factors:

1) Before the strike Boeing was looking at factory completion of LN 1 around early to mid November which is about a month off thus the first flight could take place as early as February
2) Despite the strike there was work being done on LN 1. There was the crossing of the lines by some machinists who came under severe financial stress though it's not known if any were 787 machinists
3) LN 2 needs to be completed and under go vibration testing prior to first flight of LN 2. I hear that power may not even be on in this aircraft yet though that is unconfirmed.

Boeing will probably give a new schedule and production assessment after the machinist return to work but I think that it would be reasonable to assume that first flight will not occur until January to February 2009.

Lastly one thing to think about. The labor actions of the last couple months and the continuing negotiations with SPEEA has probably left a sour taste in the mouths of all involved. I wouldn't be surprised if Boeing starts the process of moving out airliner production out of Washington State into area which is less union friendly like Texas, Arizona an the US Southeast.

I think it's a no brainer that commercial aircraft production is on its way out at Everett. It'll probably start with 787 production moving to San Antonio and then possibly followed by 777 and 737 moving to a state(s) where the unions are not highly regarded like Alabama or South Carolina. IAM has ultimately shot itself in the foot. Certainly the Yellowstone 3 (large widebody) and Yellowstone 1 (737 RS) will be built at another location.

Farnborough 2008, Day 1 Order summary

Farnborough 2008

July 14th, Commercial Aircraft Order highlights

*Bombardier launches C Series of short/medium haul aircraft with an LoI for 30 aircraft from Lufthansa
*FlyDubai orders 50 737-800 aircraft (a new order) (with ability to change to 737-900ER), will take 4 737-800 on lease from Babcock
*Etihad order 35 787-9 (previously booked) along with 10 777-300ER (also previously booked). They have also taken the following options and rights: 25 options on 787 and 10 options on 777, 10 rights on the 787 and 5 on 777.
*Saudi Arabian Airlines order 8 A330-300 from Airbus
*Niki orders 5 E190s from Embrarer
*NASAIR orders 5 E190s from Embraer
*Aeromexico orders 12 E190s from Embrarer
*Etihad order 20 A320, 25 A350 and 10 A380 from Airbus. They have taken the following options and rights: 5 A320 options, 10 A350 options, 5 A380 options; 15 A320 rights, 15 A350 rights and 5 A380 rights.

Running Totals:

Airbus:
Saudi Arabian – 8 x A330-300
Etihad – 20 x A320, 25 X A350, 10 x A380

Airbus Total – 63

Boeing:
FlyDubai – 50 x 737-800
Etihad – 35 x 787-9 and 10 x 777-300ER

Boeing Total – 95

Bombardier:
Lufthansa - 30 x C130 or C110

Bombardier Total – 30

Embrarer:
NIKI – 5 x E190
NASAIR – 5 x E190
Aeromexico – 12 x E190

Embrarer Total – 22

Show Totals - 210