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, 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.
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.
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.
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.
Original Post follows:
Update, 10:00 PST
We’ve learned that the cancellation is not from the customer we thought, so that one is still pending.
So who’s got 15 orders?
We know it is not Virgin Atlantic. Airfinance Journal reports that it is S7 Group.
10:20 AM PST: We can now add that it is not Dubai Aerospace. James Wallace of The Seattle P-I reports that his sources confirm that S7 is the airline.
Boeing has quietly reported that a customer cancelled orders for 15 787s.
We alluded to this pending cancellation in this post.
The news is on Page 4 of its press release announcing its 2008 fourth quarter and full year earnings. The customer is not identified in the release and Boeing doesn’t update its website until tomorrow (Thursday).
We are pretty sure we know who it is, but have not confirmed it so we’ll not mention names yet. Perhaps Boeing will identify the customer in its earnings call beginning at 10:30 EST.
If we’re correct, the significance goes beyond the quanity of 15 and we’ll explain why when we confirm.
EADS and its subsidiary Airbus won’t compete for the Air Force competition to replace the US President’s Air Force One.
The very idea of the President of the United States possibly flying around in a French airplane was blasphemous, even for us. With only three orders in the USAF Request for Information (RFI), there was no way EADS would assemble the A380 in the US, in contrast with the prospect of building the KC-30 air force tanker in Mobile (AL), meaning the airplane would have been assembled in France.
This leaves Boeing as the sole-source supplier for the new Air Force One and its two backup airplanes. Boeing will in all likelihood offer the 747-8 (as opposed to the 777 or, even more far-fetched, the 787). The 777 and 787 are considerably smaller than the 747-8, and the new composite technology for the 787 is something the Secret Service probably would like to see proved before entrusting POTUS to it.
Boeing has eight VIP orders for the 747-8I.
EADS’ statement is below:
Too much is being made over a decision by France to funnel cash through French banks for the express purpose of providing financing to Airbus customers.
France will provide $6.5 billion to the banks for loans to the airlines. The US government should follow suit. Bloomberg News has this report about the lack of financing available to customers potentially hurting Boeing.
The French stories headline or write about the money to the banks being aid to Airbus. In a round-about way, it is, but more to the point the world credit crisis is putting the squeeze on airlines. Depending on who you believe, there is a funding gap of $10bn to $28bn this year for customers buying airliners. Even though Airbus and Boeing pledged up to $1.5bn and $1bn respectively in customer financing this year, and other OEMs will likely step up as well, and even though the export credit agencies are doubling their participation, this isn’t enough.
The Obama Administration proposes around $900bn as a stimulus for the US economy, some of it for dubious project the Republicans rightly question, such as millions to resod the National Mall in Washington, hundreds of millions to engineer social policy via Planned Parenthood and (at least at one point) funding to build a museum in Las Vegas about the history of the mob.
Boeing is the USA’s largest exporter. Instead of funding dubious projects, Obama should earmark money for the banks that would be required to put into the credit markets to finance Boeing airplanes.
France got it right. The US should follow its example.
The head of the Boeing Tanker Program call this the ‘Year of the Tanker,” according to a news release from the company.
In the news release, Dave Bowman, VP and GM of the program, vows to win the KC-X competition that is to be resumed this year. It’s unclear yet whether the Pentagon will simply pick up where it left off last September when suspending the competition or whether an entirely new process will be started.
Boeing claims 44,000 jobs will be supported by its KC-767 tanker. Northrop claims 48,000 jobs for its KC-30. Boeing claims its tanker is 85% American content by value; Northrop claims its tanker is 60% US content (and that the KC-767 is 69% US content). Boeing’s supporters, notably Sen. Murray, challenge Northrop’s jobs claims but have nothing concrete to back up the challenge. (We’re highly skeptical of both claims, for reasons we’ve written about many times.)
But what is truly “American built?” The Wall Street Journal today (Jan. 26) has a very interesting article asking this question of the automotive industry. The parallels to aerospace are apt.
Boeing’s internal press release on the tanker follows.
All six Boeing 787s slated to be test airplanes in the certification program will retain an undisclosed number of temporary fasteners, we’ve learned.
Temporary fasteners became a cause célèbre, it will be remembered, when Airplane #1 used for the July 8, 2007, roll-out to an international media extravaganza was revealed to have thousands of temporary fasteners as a result of a shortage of the proper fasteners. This required non-standard ones be used to assemble the display airplane.
Since then, fasteners have been a continuing source of frustration for Boeing. Shortages, followed by incorrect installation at the Global Aeronautica industrial partner and then the revelation that thousands of them were designed incorrectly and have to be removed and replaced, adding further delays to the program.