Breaking: Flightblogger reports on new design flaw in 787 aft fuselage

Jon "Flightblogger" Ostrower reported that the prime reason for the production halt was not just for suppliers to catch up with production work but also to allow Boeing and it's suppliers to fix a design flaw. The flaw can potentially compromise the structural integrity of the airplane. Flightblogger reported that the flaw was discovered in December, 5 months ago.

The flaw involves shear ties which attaches the fuselage skin to the fuselage structure in section 48 and 48 aft. When there are repeated changes in the thermal condition of the rear fuselage, the shear ties can detach from the aircraft skin thus creating the structural issue.

The Fix

Flightblogger reports that the situation does not represent an immediate safety of flight issue to the test flight fleet and that a fix is identified. The fix involves using thicker shear ties and radius filler alongside the existing shear ties. Boeing says that all airplanes will meet FAA requirements.
Production

LN 23 and LN 24 are being modified now at Charleston with some modification work to be done at Everett. LN 25 will have the fix installed partly in Charleston and partly in Korea where the section 48 Aft is manufactured. The existing airplanes will be modified though apparently ZA001, ZA002 and ZA003 will not receive them as they will not be sold to customers. All customer airplanes are going to receive the modifications. Thus airplanes from LN 4 to LN 22 will all have to receive the modifications and starting with LN 55 the 787 will have a permanent fix in the section 48. Now while there has been some supplier issues that have lead to the temporary halt in production, Flightblogger's sources has said that the shear tie issue is the main reason for the halt. I will try to get more details about this issue.

Boeing said that the issue will not effect first delivery or continued production of the 787.

Flightblogger: Source: 787 design flaw drives supplier freeze

Boeing may take first steps to locate 2nd 787 line in Charleston, SC.

According to KING5 (local TV station in the Seattle area). Boeing will file building permit applications as early as tomorrow to expand the Charleston, SC plant which they had just purchased from Vought a month ago.

While there has been no definitive decision about the location of a 2nd production line, the move maybe a precursor to an announcement that Boeing intends to locate the 2nd line in South Carolina. The 2nd production line will be sorely needed if Boeing is to catch up to promised deliveries of the 787 that were delayed due to the on going issues within the program.

Another scenario (in my mind) is that it would be used as leverage to win concessions from the unions, Washington State and the City of Everett. In other words a bluff. While I may not be the best at Texas Hold 'Em, I would say that Boeing is has a pretty good hand for the time being. This story is far from over and I would not expect the Boeing announcement on the 2nd line until after flight testing on the 787 is under way.

Boeing to file building permits.

July 30 787 Update

Now that we're at the end of July I thought that it would be a good time to look at some articles that have recently come out regarding the 787 since the earnings call last week. Many people were disappointed that Boeing doesn't have any new schedule ready as of now. They said that the new schedule will be ready during the third quarter (of this year I think) so we'll see by September 30th what will happen.

Start things off, Flightblogger reported that because of the need to modify the brake control monitoring software due to overheating of some of the braking elements during a high energy (trying to stop a heavy and fast aircraft), there is a conflict between Boeing and Crane who wrote the code over who should pay for it. Crane claims that they delivered into Boeing the software they needed and that their production costs already exceeded their initial projects without and of the needed redesigns. There are a lot of revealing comments in Flightbloggers posting.

Flightblogger: Boeing and Crane

Next up, Guy Norris reports that despite the wing issues, Boeing is still doing some ground testing on the 787. Guy reported that Boeing is continuously testing upgrades to the 787 software during a Wedge Regression Test (don't ask me what that is).

Guy's July 24th 787 Update

Third, Mike Mecham, Joe Anselmo and Guy Norris talked about Boeing's lack of a schedule for the 787 and the implications (financial and otherwise). they cite skeptical analyst who believe that the schedule will move further to the right as well as the possible implications regarding costs associated with the fix and testing that has to be done.

Aviation Week's 787 Schedule Elusiveness

Batting clean up, is Dominic Gates and the Seattle Times with further analysis of the side of body issue and the seriousness of the problem (which appears to be more severe then initially revealed). In the article, Dominic Gates says that there was damaged done not just to the wing boxes (the main wing structure) but also to the center wing box which is in the fuselage. Damage occurred not at ultimate load (150%) but at a load much lower than that which explains why Boeing decided (for good reason) not to proceed with flight testing. The flight envelope would have been so limiting that it would have been useless to fly any test flights since the data collected would have been minimal. It seems from reading the article that Boeing would have to reinforce not only the wing side but the fuselage side of the side of body.

Seattle Times: 787 Wing flaw extends to inside of plane

Fifth, Boeing had moved ZA001 to the paint hanger for preliminary work before the installing the reinforcement fix. Flightblogger had said that Boeing did plan to move ZA001 into the paint hanger for the fix and that the fix may be installed as early as mid August. Aircraft ZA001 has since been moved back out to the flightline. Parts for ZA102 (third production 787) has already arrived save for the rear fuselage (as far as I know). Final assembly should be getting underway soon. My last note is that the large cargo freighters (LCF) have been making a lot of runs as of late though as I said before, it's hard to know what's, if anything, is being transported unless you have someone there photographing the loading and unloading of the aircraft.

Lastly, Boeing just completed the transfer of Vought's 787 operations today and will now be known as Boeing Charleston.

News Release Issued: July 30, 2009 2:00 PM EDT

Boeing Completes Acquisition of Vought Operations in South Carolina

SEATTLE, July 30 /PRNewswire-FirstCall/ -- Boeing (NYSE: BA) announced today the completion of the acquisition of the business and operations conducted by Vought Aircraft Industries at its South Carolina facility, where a key structure for the 787 Dreamliner is built. The acquisition agreement was announced originally on July 7.
The newly acquired facility, located in North Charleston, will be called Boeing Charleston. Boeing Charleston will be managed by the 787 program as a wholly owned subsidiary. Boeing Charleston will continue to perform fabrication, assembly and systems installation for 787 aft fuselage sections, which are made primarily of composite materials.

Editorial: 7/7/09: A good day for the 787

Two year ago Boeing rolled out the 787 on 7/8/07 in a huge media event emceed by Tom Brokaw. Boeing was very proud of what they had accomplished to that point. The two years that followed was not something they wanted to crow about. Neither was the announcement in late June about another delay to the 787 that heard collective groans from airline executives, Wall Street, shareholders, Boeing employees and aviation enthusiasts around the world waiting for this plane to finally soar.


This last delay seemed more insulting, the cherry on the top of all the other delays (that's optimistic being after the cherry you can't add another layer) since it came so close to first flight and only a week after Scott Carson pronounced his confidence that ZA001 would fly by June 20, 2009. It was like Boeing was the gang that couldn't shoot straight. However the public perception, people have to understand that designing, building and testing airplanes, especially one with as much new cutting edge technology that the 787 has, is no easy feat.

Yesterday was a good day for the 787 program coming two years after rollout. It was a good day for two reasons:

1) The 787 finally moved on its own power in a series of low speed taxi tests which included low speed RTO (rejected takeoff) tests. These tests continued into Tuesday evening around 10 PM. These taxi tests followed the successful conclusion of final gauntlet testing which concluded on the evening of July 2nd before the 4th of July weekend. You can read Boeing's discussion of the final gauntlet testing here.



2) By far the biggest news and, in my opinion, the best news came from Charleston, SC when Boeing and Vought announced the sale of Vought's 787 work share and assets to Boeing. This makes Boeing more responsible for the fabrication and integration of 787 assemblies compared to what they originally envisioned in 2003 when they launched the 787 program. A lot of the 787 program is experimental and new. This not only includes the technology but the production system that Boeing had decided upon. Now this is where risk management comes in. Boeing's purchase of Vought's 787 unit and their purchase of Vought's share of Global Aeronautica is an exercise in risk management. They recognize the weakest link in their supply chain and in the end effected the necessary actions by which they could more directly control the situation. To be clear, Vought had made great improvements at the facility in Charleston as demonstrated by improved build quality and greater completion (less traveled work) of the 787 rear fuselage being sent to Everett. However, where the risk lay was in Vought's precarious financial situation and doubts about them being able to effectively and efficiently ramp up production. Vought had its doubts, Boeing had it doubts and the result was today's announcement.


Today's action by Boeing demonstrates that Boeing will not let this program fail. The projected costs of purchasing Vought's 787 site is estimated to be about $1 billion ($580 million paid to them directly plus the release of Vought from repaying advances that Boeing had given Vought for its 787 work). Clearly this kind of cash outlay represents Boeing determination to make the 787 program the cornerstone of the company for the foreseeable future. They cannot let this program fail. Now some will point to the assumption of Vought's 787 operations as proof positive that the 787 production model of outsourcing and systems integration is drastically flawed. Boeing purchase of Vought's share of Global Aeronautica is another example of Boeing proactive risk management.


But then how can they explain that other suppliers are doing well within this new production framework? MHI, FHI and KHI continue to build and deliver their work packages and are reducing traveled work. Spirit has been the brightest spot amongst the supplier partners with no more traveled work in the forward fuselage sections that are sent to Everett. And Alenia which had some quality problems very early on is performing very well. This indicates that, after the teething problems and the learning curve ramp up, Boeing's supplier partners are doing well and is vindicating the production model for the 787. Boeing did fail initially in overestimating the capabilities of the supplier base to quickly design test and build the composite structures and other breakthrough technologies for this aircraft and this is what put them in the hole. They had redeploy assets to get the supply base back in line thus from a risk management perspective the reacted accordingly and I believe they will continue to do so. I don’t think they’ll bring in more of the manufacturing work in house save for Global Aeronautica if they don’t show substantial progress ahead of the production ramp up.

Lastly, there continues to be speculation if this move will lead to the 2nd production line (it’s a matter of when not if) being located anywhere but Everett. (Scott Hamilton wrote a piece yesterday regarding the 2nd line). There is a lot of compelling arguments for locating the 2nd line Charleston which has been wrote about ad nauseum and thus I won't repeat it here but I do beleive that Boeing will decide later this year to locate the 2nd line in Charleston for the those reasons. Once the 2nd line is established and producing 787s, Boeing 787 backlog would be eased considerably, though that will all depend on the supplier's ability to produce enough throughput to supply both lines at the same time. If successful, it all started with Boeing taking control of the situation in Charleston with Vought.

Boeing: Boeing Announces Agreement to Acquire Vought Operations in South Carolina

Just hot off the press from Boeing:

Boeing Announces Agreement to Acquire Vought Operations in South
Carolina

-- Accelerates productivity and efficiency within 787 supply chain
--Bolsters Boeing capability to develop and produce large composite structures
-- Vought continues relationship with Boeing on range of programs

SEATTLE, July 7 /PRNewswire-FirstCall/ -- Boeing (NYSE: BA) announced today that it has agreed to acquire the business and operations conducted by Vought Aircraft Industries at its South Carolina facility, where Vought builds a key structure for Boeing's 787 Dreamliner airplane.

The Vought facility, located in North Charleston, performs fabrication and assembly of structures and systems installation of 787 aft fuselage sections, which are made primarily of composite materials. After the transaction, Vought will continue its work on many Boeing programs, including other components of the 787, as well as structures and components on the 737, 747, 767, 777, C-17 and V-22 through operations located elsewhere.

"Integrating this facility and its talented employees into Boeing will strengthen the 787 program by enabling us to accelerate productivity and efficiency improvements as we move toward production ramp-up," said Scott Carson, president and CEO of Boeing Commercial Airplanes. "In addition, it will bolster our capability to develop and produce large composite structures that will contribute to the advancement of this critical technology."

"We take great pride knowing that we have been able to satisfy the technological and physical demands of the 787 program alongside much larger companies," said Elmer Doty, president and CEO of Vought Aircraft Industries. "However, the financial demands of this program are clearly growing beyond what a company our size can support. We are pleased that we will continue our 787 involvement at a component manufacturing level, as well as provide ongoing technical capabilities that have helped make Charleston a world-class composite facility."

Through the agreement, Boeing will acquire the North Charleston facility, its assets and inventory and will assume operation of the site, and the parties will resolve all matters related to Vought's prior work on the 787 program. The cash consideration to be paid to Vought at closing is approximately $580 million. In addition, Boeing will release Vought from its obligations to repay amounts previously advanced by Boeing. Separately, Boeing entered into new agreements with Vought for work packages on the 737, 777 and 787.

This transaction is anticipated to close in the third quarter following satisfaction of customary closing conditions, including consent from Vought's lenders.

Once acquired, the North Charleston facility will be managed by the 787 program. "We look forward to welcoming the South Carolina team to Boeing and continuing our relationship with Vought to bring the most value to the 787 and our other programs," said Carson.

Forward-Looking Information Is Subject to Risk and Uncertainty
Certain statements in this report may be "forward-looking" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "intends," "plans," "projects," "believes," "estimates," "targets," and similar expressions are used to identify these forward-looking statements. Forward-looking statements are based upon assumptions about future events that may not prove to be accurate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak to events only as of the date they are made and neither Boeing nor Vought undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by federal securities laws. Specific factors that could cause Boeing's and/or Vought's actual results to differ materially from forward-looking statements include, but are not limited to, those set forth below and other important factors disclosed previously and from time to time in each company's respective filings with the Securities and Exchange Commission: the failure of conditions precedent to the closing of the transaction or the failure of the transaction to close for any other reason; the failure of the parties to experience the expected benefits of the transaction; the effect of economic conditions in the United States and globally; the impact on accounts receivable, customer financing portfolios and allowance for losses of customer defaults and changes in customer credit ratings, credit default rates and collateral values; the impact on revenues and operating results of changes to indices included in indexed price escalation clauses included in contracts with commercial airplane and defense customers; the successful execution of Boeing Commercial Airplanes and Integrated Defense Systems backlog; the effects of customers cancelling, modifying and/or rescheduling contractual orders; the timing and effects of any decisions to increase or decrease the rate of commercial airplane production; the timing and effects of decisions to complete or launch a Commercial Airplanes program at Boeing; Boeing's ability to successfully develop and timely produce the 787 and 747-8 aircraft; the ability of suppliers and, as applicable, subcontractors to successfully and timely perform their obligations; the effect of political and legal processes; changing defense priorities; and associated budget reductions by U.S. and international government customers affecting defense programs; relationship with union-represented workforce and the negotiation of collective bargaining agreements; the continuation of long-term trends in passenger and cargo traffic and revenue yields in the airline industry; the impact of volatile fuel prices and the airline industry's response; the effect of declines in aircraft valuation; the impact of airline bankruptcies; the extent to which Boeing and/or Vought are called upon to fund outstanding financing commitments or satisfy other financing requests, and the ability to satisfy those requirements; the continuation of historical costs for fleet support services; the receipt of estimated award and incentive fees on U.S. government contracts; the future demand for commercial satellites and projections of future order flow; the potential for technical or quality issues on development programs, including the Airborne Early Warning and Control program, International KC-767 Tanker, other fixed-price development programs, or commercial satellite programs, to affect schedule and cost estimates, or cause Boeing and/or Vought to incur a material charge or experience a termination for default; the outcome of any litigation and/or government investigation in which either company is a party, and other contingencies; returns on pension fund assets, impacts of future interes t rate changes on pension obligations and rising healthcare costs; ability to access external capital resources to fund operations; the amounts and effects of underinsured operations, including satellite launches; and the scope, nature or impact of acquisition or disposition activity and investment in any joint ventures/strategic alliances, including Boeing's Sea Launch and United Launch Alliance, and indemnifications and guarantees related thereto.

Contact:
Jim Proulx, Boeing Commercial Airplanes Communications, +1 206-850-2102
Russ Young, Boeing Commercial Airplanes Communications, +1 425-246-6661
Lisa Quirindongo, Vought Communications, +1 203-430-3550
Lynne Warne, Vought Communications, +1 615-974-6003
More information:
http://www.boeing.com/
http://www.voughtaircraft.com/
SOURCE: Boeing
Web site: http://www.boeing.com/http://www.voughtaircraft.com/

787 Update - July 7, 2009

A quick round up of the latest goings on:

1) ZA001 finished final gauntlet testing. Boeing wrapped that up on the evening of July 2nd.
2) Boeing will perform low speed taxi tests and that may occur as early as today though Flightblogger said that it may have occurred last night. Nevertheless, low speed taxi tests are right around the corner. The high speed taxi and RTO won't occur until after the side of body fix is installed onto ZA001. After the low speed taxi tests Boeing will continue ground tests on the 787 fleet to mature the systems so they just won't be closed up and doing nothing while they implement the fix.
3) Flightblogger said that a formal Boeing-Vought announcement on the Boeing purchase of Vought's 787 operations could come as early as this morning.
4) Flightblogger found out the registration forthe next two 787s: ZA003 will be registered as N787BX and ZA004 will be registered as N7874

Flightblogger: Boeing to buy Vought's 787 Operations

Flightblogger got a major scoop today by saying that Vought (owned by the Carlyle Group) has agreed to sell Boeing the 787 operations in Charleston, SC where the rear fuselage section is constructed. Now this deal has not been made public but will be done so in a short amount of time. Jon said that sources have indicated that this acquisition can give Boeing the momentum to start a 2nd 787 production line in Charleston which has been hinted at in the past and should allow them to get production running to 10/month by 2012 according to Boeing's plans.
This deal will bring Boeing back into a much more involved role as manufacturer of the 787 then their initial plans when the program was launched in 2003.

With this Boeing would not be directly responsible for the manufacture and integration of the complete rear fuselage section (47/48) as well as the vertical stabilizer (tail). They're also heavily involved in Global Aeronautica, owning a 50% stake in that venture which they also purchased from Vought.

Now if Boeing decides (as I believe they will) to start a 2nd line in Charleston, one issue people are going to bring up is the lack of skilled aeronautical workers in the area. It should be noted that when Boeing started the 787 final assembly line in Everett many of the MT (manufacturing techs) were new hires who did not have direct aerospace manufacturing experience but who had skill sets that would be of use on the final assembly line after undergoing an intensive period of training and testing before being hired to work on the 787 final assembly line. I do think that Boeing will set up a similar education and training facility to train 787 MTs in South Carolina for the 2nd assembly line similar to what they did for the 787 line in Everett.

Boeing buys Vought 787 facility

Boeing Looking More Seriously at 2nd 787 Final Asembly Line

In an interview with reporters Mike Mecham, Guy Norris and Jens Flottau, Boeing CEO Jim McNerney gave the strongest indication that Boeing will go ahead with a 2nd production line for the 787. According to the Aviation Week article the decision may come as early as late this year with an year of starting operations in late 2010 when work on the 787-9 will be expected to get underway.

Aviation Week cites sources as saying that the second line announcement can come very soon and that North Charleston, SC has been chosen as the sight of the 2nd final assembly line. North Charleston does have the advantage of being nonunion as well as the locale for current 787 assembly activities done by Global Aeronautica (main fuselage integration) and Vought (rear fuselage fabrication and integration) as well established logistics capabilities and plenty of land to build a final assembly building near the current Vought and GA facilities. Boeing would have to only fly in the forward fuselage from Wichita and the wings from Japan (not counting the structures from Alenia in Italy and the structures from Fuji and Kawasaki in Japan that will go into the GA site as it currently does).

Predictably the Boeing Unions in Everett (SPEEA and IAM 751) are not happy at the prospect and they may have even more reason to worry in my opinion. If Boeing goes ahead with a South Carolina assembly plant, they could add enough space at that plant to possibly shift all 787 final assembly from Everett and there would be nothing that IAM or SPEEA could do about it especially if the new final assembly line is more efficient than the Everett line.

Aviation Week's 787 Second Line Article

787 Production Progress: Vought bringing back some workers in Charleston, SC

In another sign of production progress, Vought is bringing back some of the laid off workers at the Charleston, SC plant where the rear fuselage is produced. These workers were laid off due to the IAM strike and are now being recalled to help support the increase in production of the rear fuselage sections for the 787.

Read the article here.

Vought may shut down North Charleston plant

In a press release, Vought is considering shutting down it's 787 operations in North Charleston. Currently, Vought has stopped production of the rear fuselage section (sections 47 and 48), reduced outside contractors, and redeployed most of the current workforce towards completing the existing sections (up to airplane 19).

Here is the relevant section of the press release pertaining to Vought's 787 production:

"787 Dreamliner Program A number of actions are being taken on the 787 program at Vought’s North Charleston facility because of the continuing Boeing IAM strike, coupled with the effects of previous 787 program schedule delays. Given that Vought has already fabricated enough barrels to support deliveries through airplane 19, the company must continue to slow its production rate and take the necessary actions across the program. Up until now, Vought has only released most of its outside assembly contractor workforce. Today, in addition to continuing this action, the company announced it is suspending its 787 composite bond fabrication operations, which will affect production and production support personnel. Assembly employees will also be redeployed to concentrate on existing fuselages closest to completion. Over the next 30 days, a variety of additional actions related to its 787 program activities are being considered, including the possible temporary shutdown of the entire plant. “This is a challenging time for all of us who support the Dreamliner program,“ said Joy Romero, vice president and general manager, 787 Program. “Since the beginning of the Boeing strike, we’ve been looking at ways to mitigate potential employee job loss in North Charleston, including the initial reduction of outside contract labor. We plan to work with our employees to identify temporary redeployment opportunities at other Vought locations, where possible. This activity will require everyone’s patience, focused attention, and best effort to ensure a smooth continuation of required work activities, while continuing to provide customer support.”

Effects of the strike on the 787

About a week and a half ago a Boeing 747 LCF made a routine delivery flight from Nagoya, Japan to Charleston, SC stopping in Anchorage, Alaska to refuel. Now typically these delivery flight are routine and usually not the subject of a blog entry but with the IAM strike going on at Boeing, it does underscore a couple of things about the what is happening with Boeing’s production model and it’s relationship with outside contractors and its labor unions.

First let’s look at the 787 as of late last week. Jon Ostrower, reported in his blog that ZA001 had its nose cone attached and that the airplane is sitting on its wheels which means that the landing gear swing tests seem to have been completed. Jon also says that he saw flight test equipment on the airplane. Right now the impediment to Boeing getting the plane out the door (other than the strike) is getting the remaining flight test and cabin equipment installed on board as well as knock on effects from some small systems integration issues. Schedule margin is tight without the strike as it is and Jon and Scott Hamilton reported that first flight would be delayed as much as 5 weeks (into mid December at the latest) before any strike effects.

Adding to the pressure of the 787 program is a report by Geoffrey Thomas saying that the production problems on the 787 are hurting new sales of the airplane. Apparently, delivery slots are not available until 2020 which means that the impact of the production problems have effectively pushed out the earliest delivery slots by about 2 to 3 years unless Boeing can manage an orderly increase of 787 output to about 14/month.

Now because there is strike on doesn’t mean that work on the 787 has come to a grinding halt as evidenced by the LCF flights this week. The tier 1 contractors like Global Aeronautica, Vought and Mitsubishi will continue to produce their respective work packages for as long as they possibly can (without shipping further sections and wings to Everett). Depending on when the strike ends, this work during the strike period will eliminate traveled work going to Everett. Boeing can restart production on LN 5 when those parts arrive with no traveled work to be done thus utilizing the 787 production line in a manner it was intended. This can only help in increasing the production rate of the 787 in the near term. So while the strike is on going at Boeing that hasn’t completely bought the 787 production to a grinding halt and may in fact help the production system recover fully by the time the strike ends. One note to all this is that some Boeing’s 787 suppliers are starting to cut back on production, namely Spirit has said they are cutting back on production on some of the products they supply to Boeing without citing any specific Boeing programs. At the end of the day there will be progress in the suppliers’ efforts to clean up the production mess and get their end of the business back on track because of the strike. If Boeing can get its end in order then the production model for the 787 can be a big success.
Read an AP report here.

That all said the question that should be asked (and so far has not) is the IAM being very short sighted in its on the issue of outsourcing. James Bell Boeing’s CFO said at a conference yesterday:
The union, he said, "would like all of the work to be done in the Puget Sound area and that's not realistic." Boeing, he explained, would like "complete flexibility" to outsource work to suppliers; "We have to figure out what's the right balance."
There is nothing that could stop Boeing from selling its Renton and Everett plants to an investor thus turning Boeing into a pure systems integrator and having Renton and Everett bid on work packages much like other firms did when they went shopping for suppliers for the 787. We’ve already seen that happen with Boeing Wichita when those operations were sold to Onex Corp. and was renamed Spirit Aerosystems. Is something like that going to happen, probably no but it is plausible. It is one thing for the IAM to fight for better wages and health care benefits for their membership and their retirees but it is another thing to try and dictate to Boeing management what can be built where in a world of tight margins and intense price competition from Airbus. To see how much things have changed Spirit is going to be building fuselage panels for the A350 for Airbus. Clearly outsourcing is not just an American phenomenon but a global one and Boeing competes on a global stage.

LCFs evacuate Charleston

Two of Boeing LCFs left Charleston, SC this morning. The two flight plans filed showed one aircraft heading to Pinal Airpark in Arizona and another heading for Anchorage, Alaska. Here are the flightaware flight plans here and here.

Hurricane Hannah is over Bermuda and the current projected track shows it heading to the Charleston, SC area by Saturday morning. I'm not sure what other preparations Vought, Boeing and Alenia are making for the 787 plant in Charleston.

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.

Boeing 787 Update at Farnborough

Pat Shanahan gave a 787 update this morning in the UK though short on details (as opposed to the one in April) it still suggests that they are on track for first flight late this year. Power on was successfully completed with a few minor glitches that were quickly resolved. Boeing is finalizing the shipping date of the two remaining sections for LN 4 later this week. My guess is that they will be in Everett by the end of next week but we’ll see.

Boeing is planning to activate LN 1’s hydraulic system next week, otherwise known as “oil” on (as opposed to power on). This will allow Boeing to raise and lower the landing gear in the hanger before first flight (you don’t want to test something like that on first flight in case something goes wrong). It will also allow Boeing to test all the movable flight surfaces (flaps, slats, elevator, rudder and speed brakes). As reported on this web site earlier, Boeing was planning to move the fatigue air frame from 40-24 to the fatigue test area and move LN 1 from 40-26 to 40-24. The later move is probably in doubt due to hydraulic on next week and the need to test some of the mechanical systems. I think the move of LN 1 probably won’t occur until 1st to 2nd week of August

Regarding LN 4 – the damage to the main fuselage caused a disruption in the schedule and the certification process maybe impacted though Boeing says they do have some schedule margin to absorb the disruption in the schedule.

Speaking of margin, Shanahan said that small glitches in the production schedule is eating up some of the margin. I’m presuming that he’s talking about LN 4 and that may be a cause for concern further down with certification testing. Everett is now the bottleneck for continuing production. The suppliers are no longer the issue and they have greatly improved on reducing traveled work. Look for no traveled work starting with LN 8, by then Global Aeronautica should be shipping 100% complete sections, Spirit is already shipping 100% complete sections with LN 4 and Vought will ship 100% complete rear fuselage sections starting with LN 5.

One issue with regards to the road to first flight is the traceability of the brake control software to meeting certification requirement which is being characterized as a minor issue and that a fix is being implemented. Crane Co. is responsible for that part of the Dreamliner.

Right now Boeing is saying that APU and engine testing is due to start next month, followed by gauntlet testing (a series of tests that trick the airplane’s computer into thinking that it’s in flight and see how the systems react to normal flight procedures as well as in flight anomalies). This will be followed by taxi and brake tests and then first flight. Shanahan is saying first flight should take place around November but I personally think it’ll be October if there are no major issues.

So far Boeing has completed 98% of safety of hardware testing, 96% of hardware is qualified for first flight (will be 100% by 2nd week of August) and 95% of hardware is ready for first flight. Despite this progress there is still some part shortages with LN 1 though these are minor. There is still some work to do in the mid fuselage and the wing of LN 1 and they need some tubing to complete the fuel system on the airplane as well. Also they need to complete airplane 2 before airplane 1 can fly as airplane 2 will be used for ground verification tests. Finishing up work in the mid fuselage of LN 2 also has eaten into some of the margin.

In terms of future variants, Boeing is planning to finish trade studies for the 787-9 by the end of the year and have a firm configuration for the 787-9 by the 2nd quarter of 2009 and entry into service by early 2012. They also said that the 787-3 will benefit from the experience gained on the 787-8 and 787-9 thus indicating that they are still going to go ahead with that variant though the time table is still up in the air.

On the static test aircraft frame, testing is due to start soon with three main tests to be done soon: pressurization testing, leading/trailing edge testing, and vibration testing.

Until the next update…have fun and keep your head in the clouds!

787 getting close to power on.

BREAKING: Another source says that power on will officially start tomorrow - June 12th. I am trying to get more information.

A source in the 787 program told me that there is still some good progress being made on LN 1, the first 787. Power on should still take place at the end of this month.

More significantly, ZY998, the fatigue test airframe is due to move out of the final assembly building (40-26) on June 19th and into the 767 final assembly building (40-24). It'll stay there until July 20th when it will be moved to the fatigue test site north of Boeing assembly plant.

The move on June 19th will allow Boeing to start assembly on Dreamliner #4 (LN 4).

Jon Ostrower has been in Charleston yesterday and got some great pictures and reported on the progress at Vought and Global Aeronautica. Jon also reported that the third LCF (Dreamlifter) has been certified by the FAA and will be in the US to start hauling 787 sections and parts in July.

More news to note: Boeing and Vought closed on the sale of Vought's share of Global Aeronautica to Boeing today. Boeing and Alenia are now 50-50 partners in the joint venture which assembles the main fuselage section for the 787 from the sections supplied by the three Japanese Heavies and Alenia. In being a partner with Alenia, Boeing is essentially bought inside the Global Aeronautica plant where they can have more control and can continue to look over Vought's shoulder in Charleston.

Lastly,
Dominic Gates from the Seattle Times has a great article on a media visit to Charleston which took place yesterday. Read about it here.

787 Back on Track?

While it is way too soon to say that the 787 program is back on track, recent milestones seem to indicate that Boeing is getting the 787 house (and assembly line) back in order. In the conference call on April 9th, Pat Shanahan had outlined goals or milestones for the 787 program for the remainder of the 2nd quarter of 2008. These include:

* Static airplane will move out of the factory at the end of April to make room for the third flying airplane. Parts for airplane 3 will arrive in Everett by the end of April
* Power on date moved to June 2008* Fatigue airplane will move to its test stand in June shortly followed by parts for airplane #4 to enter final assembly in June* By June 30th will have static and fatigue frames out at their test sites, final assembly begun on airplanes 3 and 4 in Everett, completing systems hardware airworthiness qualifications, finishing safety of flight testing for system hardware and software integration, and receiving flight test systems hardware.

From recent flight made by the LCF and the recent movement of the static test airframe from building 40-26 to 40-23 for the start of static tests, it looks like Boeing is on its way to accomplishing the first goal listed. Parts for Airplane 3 are in Everett and the static frame has been moved out of the 787 final assembly hall. Additionally the fatigue air frame has moved to the third assembly position and LN 2 has moved to the 2nd assembly position thus clearing the way for LN 3 to start final assembly.

While there is some assembly yet to be done on the static airplane, that will be done concurrently with the setup for the static tests. Those tests are expected to start this summer.

Boeing now has two months to get airplane 1 ready for power on and ground testing as well as start assembly of airplane 4 and all the while there are still lingering doubts about the program and if Boeing has been conservative enough with its schedule. As many analysts (and Boeing itself) have said, once they’ve powered on airplane 1 then a significant amount of risk would have been retired and the path should be clear (assuming no major issues that are uncovered during ground testing) to first flight. This is the key metric to watch for in the short term.

One thing that is working in Boeing’s favor (a lesson learned from the A380 delays) is that they and their risk sharing partners took advantage of the delays to wring out the systems in the test labs in Seattle, reduce the travel work sent by the suppliers, and maturing the systems hardware and software (mainly the flight control software). This will go a long way in having a mature airplane at first flight as well as make progress on non-flight testing certification tests and deliverables for the FAA/EASA certification.

Now one month does not a trend make and the real indication of the health of the program will be realized on June 30th. If Boeing provides customers, analysts and shareholders with short term goals for the quarter and it achieves those goals then Boeing management will have come a long way to repairing their image and reputation.

Now I think Boeing was a little too conservative in their time line and they could perhaps achieve first flight earlier. I do think that power on will be achieved by June 30th and that power on testing as well as ground testing and taxi test could take two months. That takes you to August 30th. Boeing can then have first flight in early September...late in the third quarter. Now assuming a 10 month flight testing program and certification brings the time to early July 2009…2nd quarter of 2009 for first delivery and EIS as opposed to 3rd quarter 2009. Is this achievable? Sure but at the same time Boeing has to mature the systems with aggressive testing and carefully manage the production ramp up.

Boeing needs to give Wall Street, customers, and shareholders detailed quarterly goals and milestones that they need to meet in order for the confidence to be rebuilt in the company and in the program. These goals and milestones shouldn’t be for just Boeing itself but also for the partners and suppliers. Already there are reports that Vought will be starting to ship fully stuffed rear fuselages (section 47/48) sometime between June and September (more likely September and with that section will be from Dreamliner #6). Certainly with Boeing buying out Vought’s share of Global Aeronautica, it’ll have more control over what happens there but will allow Boeing to continuously look over Vought’s shoulder.

Going Forward

While in the short term Boeing has made some strides to recovery, there are risks that remain as well as questions about the 787.

Flight Testing and Certification – After power on is accomplished Boeing needs to hope for a relatively smooth flight tests of the airplane if they are to keep to schedule. What will also be critical is Boeing’s change incorporation program. When issues crop up during testing the changes and fixes must be incorporated back from the planes that were built all the way back through the supply chain to the planes that are just starting the production process. How Boeing and the supply base handle all that is going to remain critical to getting production moving. For that reason Boeing won’t be producing 787s in any great numbers until almost all the test flights and certification paperwork is done. Rumors were going around that the FAA is going to force Boeing to do more certification work then previously agreed and that it would mean that EIS wouldn’t occur until 2010. The German magazine that reported this said that Boeing would announce a fourth delay due to the extra certification work in mid May. Both the FAA and Boeing denied the story and there hasn’t been any further news on that. Still issues could come up during flight testing that might force the FAA to ask Boeing to do further modifications and tests to give them satisfaction. At least worries of cold soak tests are put to rest.

Production – With 25 planned deliveries in 2009 Boeing’s big worry after flight testing is ramping up production and catching up with deliveries. Pre-delay, Boeing was planning to deliver 112 787s between May 2008 and December 2009. Now they’re planning on only 25. Assuming that they stay on that schedule they will be behind by 87 airplanes. That’s roughly 4 airplanes per month. Boeing needs to find someway of making up those 87 deliveries. Boeing is starting to plan out a gradual production increase to approximately 10/month by 2012 but how that will resolve the backlog is unclear. Production is also key for future orders as Boeing’s salespeople need to give a time frame to potential (and current customers) about when they can expect their airplanes given these delays. That’s going to be a factor of planned production rates as well as what the suppliers can reasonably be expected to produce.

Weight – Before the delays took the stage as the main issue, the 787s 2% weight gain (about 5000 lbs.). We have not had an update on this issue though previously Boeing said that they expect that the 787 will meet its weight goals by airplane #7. Whether that is still going to be achieved is unclear and good represent risk on only to the -8 but also to the other variants. Already there have been reports that the -9 variant is also overweight and that the fix to the center wing box added some (though negligible) weight gain. Through static, fatigue and flight testing Boeing can identify over engineered structural parts and target them for weight savings. What remains to be seen is how fast those changes can be incorporated into all the produced airplanes if at all. The delay may make it hard for Boeing to achieve the target weight for airplane # 7.

Future Variants – Boeing has pushed back the service entry for the larger -9 variant to 2012, a two year delay and pushed the -3 to an undetermined sate beyond that. Clearly Boeing is looking to make up time to most customers by delivering as many of the -8 as possible (to date they have 646 -8 orders, 207 -9 orders and 43 -3 orders). Also to be determined is the specs and EIS date for the -10. Boeing has put this off for several reasons: 1) They want to know what they’re competing with in terms of the A350-900 and 2) They need to get flight test data in order to see to help design the -10. When they offer the -10 Boeing can be well poised for the A340/777-200ER replacement market. In my opinion an EIS for the -10 cannot be reasonably expected before 2014 at the earliest.

On April 9th Boeing execs gave us details of the delay as well as milestones that they have set of themselves and the program. One thing that was noticeably different was the greater detail this time around. They gave goals that they intend to accomplish between April 9th and June 30th and it would be expected that around early July they will probably give goals that they intend to accomplish for the 3rd quarter of 2008 as well as an overview of what they did and did not accomplish in the 2nd quarter. This transparency goes a long way starting the rebuild confidence in the program and management. It’s not their yet but the fact that they have already accomplished some of the goals that they laid out in the April 9th conference call gives them a foundation to work on.