Here are some thoughts about the risks Boeing faces about establishing 787 Line 2 in Charleston vs. Everett. An understanding of Washington State politics is at the core of these musings.
- Federal politics. Certain members of the Washington Congressional delegation, notably Sen. Patty Murray and Rep. Norm Dicks, along with Sen. Maria Cantwell and Rep. Jay Inslee, are very vocal about keeping Line 2 in Everett, which lies in Inslee’s district. Dicks and Murray are powerful members of their respective appropriations committees. How pissed off will they be if Boeing puts Line 2 in Charleston, and will this affect their advocacy of Boeing interests in Congress, notably the….
- KC-X tanker impact. In an unfortunate coincidence of timing, Boeing’s decision on locating Line 2 (set for year-end) will come shortly after the new Draft Request for Proposals is issued (expected in September) for Round Three of the KC-X competition. Murray and Dicks are hyper-vocal advocates for Boeing’s tanker and opposing Northrop’s tanker. Nobody expects these two to reverse themselves, but they certainly could mute their opposition to Northrop as a pressure point on Boeing or in retaliation for a Charleston decision. Read more…
Market reaction Thursday to Boeing’s new schedule for 787 first flight by year end, and EIS in 4Q10, was good: stock closed up more than 8% or $4 to $51.82. The Dow Jones Industrials were up a mere 0.39%.
Aerospace analyst reaction was a bit more muted.
Here is a 16 minute podcast about the conference call and news.
Here is a running recap of the Boeing webcast on the announcement today of the new schedule and $2.5bn charge.
Present on the call are CEO Jim McNerney, CFO James Bell, Scott Carson, CEO of BCA, and Pat Shanahan, VP Products at BCA.
McNerney (JM): There is no question the execution of this program has had challenges and there is work still to be done. We see the 787 adding tremendous value to the customers and Boeing.
Carson (SC): We are contacting customers with timing of deliveries. 787-9 first delivery in 4Q13. As part of schedule adjustment increased time between first flight and first delivery to address issues that might arise during testing. First three test airplanes, suitable for flight testing and certification, have limited commercial value.
Boeing’s Press Release: Note webcast at 0700 PDT referenced at the end.
The 787 is to fly by the “end of the fourth quarter” and frst flight in the 4th quarter of 2010. Production rate to 10/mo is now projected in late 2013, a year later than planned on the previously revised schedule.
During the 2Q09 earnings call, Boeing seemed to be laying the foundation that a forward loss might be forthcoming on the 787 program and some analysts shortly thereafter issued notes predicting there will be one. However, within the last two weeks two analysts that we know of have taken a different view. (We see reports from only six of the aerospace analysts who cover Boeing.) Read more…