FAA responds to 787 fastener issue

When we were preparing our report about Boeing planning to operate its 787 flight testing program with some non-conforming fasterners still installed on the first six test aircraft, Boeing responded to our inquiries by noting that it worked with the FAA to ensure compliance with rules and safety.

In a routine action, we also inquired of the FAA. This was January 13; we published our story January 25, still awaiting the FAA response. We received that response today. Here are the questions we posed and the FAA’s answers:

SPEEA to Wichita: Reject contract

SPEEA, the Boeing engineer’s union, today urged its members at Boeing Wichita/IDS to reject Boeing’s last contract.

In this market, observers probably think SPEEA is looney, but SPEEA believes Boeing is gearing up to sell the plant and Boeing won’t offer language to protect the union members in this event. The contract offer is less than SPEEA received for its Puget Sound (Seattle) and Utah workers.

Split tanker buy: Murtha

He didn’t get much notice last year when he said it, but US Rep. John Murtha (D-PA), a key member in the House and generally one sympathetic to Boeing, is urging a split buy between Boeing and Northrop Grumman for the KC-X.

George Talbot of The Mobile Press-Register has this story. Aviation Week has this report.

Update, 10:20 AM PST: With SPEEA, the Boeing engineer’s union, recommending rejection of the company’s best and final offer, SPEEA put out a statement that included this paragraph; we wonder what Kansas Sen. Sam Brownback and Kansas Rep. Todd Tiahrt think about this–they are among the most vociferous boosters of Boeing’s KC-767 offering for the USAF KC-X:

Work at Wichita includes Italian and Japanese 767 tankers, E-4B (747 Airborne Operations Center) and E-737 Australian Wedgetail (Airborne Early Warning and Control Aircraft). The Italian tankers and Wedgetail are years behind schedule. While union members worked with management to secure the contract for the next aerial refueling tanker, the company refuses to commit to bringing the work to Wichita if Boeing secures the $35 billion contract with the Air Force.

767-400: sold

Boeing sold its 767-400 that was built as the USAF E10 test bed and which we kept asking (without response) if Boeing might convert to a prototype for a bid for a “KC-764″ aerial tanker. Flight Global has this report.

Boeing posts loss in 4Q

Update, 3:30 PM PST:

It’s been a busy day responding to media requests for comment about Boeing’s financial results and earnings call. This gives us a feel for how the media viewed the call and the issues they see.

Here are our thoughts after all that.

• Many media viewed Boeing as pointing the finger at the IAM strike for its 4Q loss. There’s no question that the shortfall of some 70 aircraft in 4Q deliveries caused a big hit to the revenue, and that the full year shortfall of some 100 aircraft hit the full year revenue. But don’t overlook the cost-base. Continuing costs for the delayed 747-8 and 787 programs were significant and costs hurt profitability. So did the legal costs. Pointing the finger at the IAM is simplistic.
• Is the 10,000 job reduction the result of the IAM strike and contract? We don’t think so. We think this is Boeing’s prudent response to a lousy global economy.
• We received media questions about whether Boeing is in serious trouble. Our answer is a resounding No. As we’ve previously written, we view 2009 as the year of recovery for Boeing’s airplane development programs. Production lines are returning to pre-strike levels. The one-off nutplate issues are largely resolved for the new airplanes and a program is likely in place for those faulty nutplates on delivered airplanes. Mature airplane programs are humming along.
• What about production this year and next? Boeing personnel meet at least weekly and perhaps more often to assess market conditions. We’re confident they have a good feel for what’s going on in the world and are prepared to take whatever steps are necessary to respond. The question is how quickly can a monolithic organization respond. It takes 18 months to ramp up production with the supply chain. How quickly can it be ramped down, should that become necessary? A key point in the earnings call is that for the first time, Boeing is sounding caution about production beyond this year. Officials refuse to give earnings and production guidance for 2010 at this time.

We remain cautious about Boeing due to the 747 and 787 programs–these need to get flying–and the general global economy, but there is no reason to worry about Boeing itself. The media questions on this score are totally without foundation.

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