Taking care of business at the airframe OEMs

The news yesterday the Boeing resumed delivery of the 787 is good news, not just for Boeing and the airlines, but for all the stakeholders.

Although Boeing did not stop or slow production of the aircraft during the grounding, had the grounding continued for six months instead of 3 1/2 we saw, Boeing may well have had to slow down the supply chain.

The 50 airplanes in the field are slowly returning to service. The last are to be carrying passengers by next month.

Now it’s back to taking care of business.

The launch of the 787-10 was pushed to the right during the grounding. We fully expect this launch to come soon, perhaps at the Paris Air Show. The 777X received its Authority to Offer last month. We anticipate formal launch by year end, perhaps at the Dubai Air Show with a huge order from Emirates Airlines. We also think there will be some commitments announced at the Paris Air Show, by Qatar Airways, which always likes to make a splash at the European event.

Production for the 787 is ramping up toward the 10 per month goal Boeing set for the end of this year, and despite skeptics (we included), it looks like this will happen. But Boeing needs to go beyond 10/mo to 14 to accommodate the 787-10 and demand for the current offerings. With a planned 2018 EIS for the -10, there’s plenty of time to bring the supply chain into line for this.

Over at Airbus, the A350 MSN001 has been painted and is prepping for handover to flight test.

Odds and Ends: Post-SPEEA Vote; LionAir and RyanAir; ANA skeptical of Boeing timeline

Post-SPEEA Vote: The ratification of the contract offer by Boeing by the SPEEA technical workers is welcome news. It gives Boeing and its stakeholders certainty at a time when the 787 issues remain outstanding and the developmental programs of the 777X, the 787-9 and 10, the 737 MAX and the KC-46A are at important stages. Although SPEEA took a loss over the pension issue, the union was able to extend the previous contract provisions over economic issues for another four years. Call this a draw for the two sides.

LionAir and RyanAir: On Monday Airbus announced an order for 234 A320ceo/neo family members from LionAir, previously an all-Boeing customer. Today Boeing announced an order for 175 737-800s from RyanAir, an exclusive Boeing customer. There were no MAXes in the order, however. RyanAir CEO Michael O’Leary has not been a fan of the re-engined 737.

ANA skeptical of 787 timeline: Reuters has an interview with All Nippon Airways in which it expresses some skepticism about the Boeing timeline of returning the 787 to service within weeks. ANA calls this a “best case” scenario.

On the other hand, LOT, which took the 787 out of its schedule through September, now says the airplanes could be back in service by summer.

Vote in the Polls: All Nippon Airlines has begun its effort to rebuild the 787 brand flying in its colors. Boeing began its effort last week. Is the view of the 787 turning? If you haven’t already done so, please be sure to vote in these polls (scroll down after clicking the link).

Paine Field Pleads its Case: Targeted for closure in Sequester, with a decision to be announced this week, the director of Everett Paine Field pleaded his case to remain open in this letter:  FAA Tower Closure – Paine Field (1).

Well wishes: Daniel Tsang, founder of Aspire Aviation, has been hospitalized in Sydney, Australia, with an unknown ailment first thought to be measles but it’s not. Well wishes to him.

 

PNAA Conference: Aboulafia on CSeries, 777X, 787-10 and A350

Bombardier has an uphill battle selling CSeries in part because of the production might of Airbus and Boeing, says Richard Aboulafia of the Teal Group. With the two big OEMs each producing the single-aisle airplanes at rates of 42 a month, Bombardier faces the ability of the two simply offering an incremental airplane for huge discounts.

Aboulafia also said BBD had a lack of “commercial aggression.”

He made the remarks at the 12th annual conference of the Pacific Northwest Aerospace Alliance.

Aboulafia also criticized Boeing for apparently “pushing to the right” development of the 787-10 and 777X as a result of the current 787 battery issues and grounding.

He praised Airbus for its pursuit of the A350-1000 and the advantage it will give Airbus if Boeing continues to delay the 777X.

Boeing conference call with 787 update

Boeing held its 2012 earnings call, and with it officials offered an update on the 787 situation.

Jim McNerney (CEO) (JM)

Greg Smith (CFO) (GS)

JM: 787 Update–

Job one on 787 is supporting the investigation on the 787 battery incidents. We rigorously support the process. We do believe good progress is being made in narrowing down the cause. Assigned hundreds of experts within Boeing, brought in outside experts, supporting NTSB, JTSB. We will get to the bottom of this and in so doing restore confidence in the 787. Thanks engineers and all others in investigation. We’ve seen the airplane in service for 15 months and it delivers on promises.

• Progress continues on 787-9, with assembly beginning in mid-2013. First customer delivery on schedule in early 2014.
• The case for the 787-10 has strengthened with a potential launch this year.
• We have more work to do on 777X and this is a big part of the focus this year.

GS:

• Our 2013 guidance assumes no significant financial impact due to 787 issues.
• Expect 635-645 deliveries this year, including 60 787s via rate hike and the reworked airplanes. Deliveries from Everett Mod center will decline.

Q&A

Boeing’s Charleston land buy is bad news for Washington State

Update, Dec. 21: A story on this topic:

Charleston Post-Courier: a much longer, in-depth piece than its original report linked below.

Original Post:

Boeing has agreed to buy a lot more land in Charleston (SC) to expand its plant there over time.

Illustrations via Charleston Post-Courier.

We believe Boeing is preparing to eventually locate new airplane programs in Charleston rather than Washington State. This would be the successor to the 737 MAX, potentially the 777X and we would not be at all surprised to see the 787-10 assembled in Charleston.

The contentious SPEEA negotiations aren’t going to help matters. We also believe Washington’s strict environmental laws are a factor, which seem on a track to get stricter with the move to clean up Puget Sound to save the fish.

Our estimated timeline is over the next 10-20 years (sooner if the 787-10 is placed in Charleston).

This is entirely our assessment–we can’t say we know anything about this. But the old adage is that if it looks like a duck and walks like a duck, then it’s a duck. And this sure quacks to us.