Testing continues on the 787 as it prepares for first flight in June.
Speculation is rampant over whether the airplane will be ready to fly before, during or after the Paris Air Show (but for clarity, “during” does not mean “at” the air show).
We believe Boeing would dearly love to be able to talk about first flight at the air show. Tests appear to be moving more quickly than anticipated, as reported by Flightblogger in its running countdown to first flight.
We are hearing widely divergent opinions about whether first flight will happen in time for Boeing to discuss it at the air show or not.
Separately, JP Morgan issued its routine post-Boeing investors’ day report last week. It contained an interesting item that we did not hear, listening to the podcast, or missed its significance if this comment by CFO James Bell was during his formal presentation. (If it came during the break-out sessions, these were not webcast and we wouldn’t feel silly missing it.)
Joe Nadol, the aerospace analyst, wrote:
“Management acknowledged that BCA overall could generate negative earnings on a unit basis next year, meaning that the loss on the 787 deliveries could more than offset the earnings from 737 and 777. A major question going into next year is how large the initial deferred production cost balance will be that will drag on earnings for years to come, and we think somewhere between $5-10 billion is probably the right number, but management has offered no guidance whatsoever on that front.”
We understand there are billions of dollars in claims by airlines and suppliers and the final numbers aren’t even in yet because until the airplane gets delivered and a production stream is in place, the final numbers can’t known. The 787 will be a good/great airplane when certain block points are achieved, but the program has been a financial disaster so far (and as a long-term shareholder, this is of no small consequence to us).