Boeing’s Albaugh at JP Morgan conference

Jim Albaugh, president of Boeing Commercial Aircraft, appeared March 9 at the JP Morgan Transportation Conference, one day after Northrop Grumman withdrew from the KC-X competition.

Below is a running tab of Albaugh’s presentation and Q&A.


  • Albaugh was concerned we weren’t being aggressive enough to decide what we are going to do with 737–re-engine the airplane or replace it, and the same with the 777. So two special groups have been formed to determine the future of these airplanes.
  • We are starting to see traffic come back and be at 2008 levels this year, grow in 2011.
  • 787 is going to be a challenge. We have a very aggressive flight test program ahead of us. We have to fly each of six airplanes about 90 hours a week. We have to ramp up production rate. Right now 2/mo, going to 2 1/2 by August, 10/mo by 2013. Highest previous rate was 92 747s.
  • 747-8 program issue is that while it is not a significant departure from 747-400, flight testing of 787 and 748 are right on top of each other. 748 issue is market acceptance; passed on selling some more airplanes in 2009 because we did not feel we would get the value these airplanes deserve.
  • 737 and 777 are the foundation of BCA. The 737NG has been around for 10-13 years. We project out in five years it will be a crowded marketplace. Some competitors are putting new engine technology on the plane. Airbus is talking about re-engining the airplane. Mike Bair is assessing whether to keep the airplane as is; re-engine; or go with a new airplane. We don’t want to re-engine the airplane and have a me-too airplane with  5%-7% advantage of competitors. If we don’t re-engine, we won’t be doing a new airplane. Still trying to figure out how to scale down 787 technology. Don’t want 737 to be in last place.
  • Chinese are going to invest $30bn in commercial airplanes in next decade and they will eventually get there. We have to decide whether to cooperate with Chinese or compete against them. We will not exit smaller airplane market. This will not be the option we choose.
  • We have an aging work force. How do we encourage new people to get into aerospace, how do we work on next generation of leaders? We are trying to drive accountability down into the workforce? In my mind, too many decisions were made too high up. How do we create leaders without accountability in the workforce?
  • 737 continues to evolve, dating from the 1960s. 787-inspired interior goes in from October. Quieter. 2% better fuel consumption.
  • 777: trying to improve fuel burn, working with fuel suppliers, trying to increase maximum zero fuel weight for allow greater payload, higher thrust engines for better high-altitude airports.
  • 787: We’ve had more than 70 flights, about 300 hours. There is good information flow between 787-8 and 787-9. We are aggressively taking weight out of the airplane. Expect first delivery out of Charleston in 2012.
  • 40% through flutter tests on 787, hit Mach 0.97 in a dive (787).
  • There is 1-1 1/2 month of contingency in the flight test program. Wants to get more. (Editor’s note: originally there were 3 months margin.)
  • Productivity is something we are very focused on. Taking a hard look whether to increase 737 rate this summer from 31.5/mo to 34 mo. To decide this summer. 777 is starting to look a lot like 737 relative to Lean manufacturing. Looking hard at rate increase for 777 in April.
  • In 2010 Boeing has to execute 787, 747 programs. We have retired a lot of risk but we have a lot of risk ahead of us. We have to decide what to do with 737 and 777; both airplanes will be under attack. We have to maintain health of the programs, increase the program margins, especially on 787 and 747.
  • We have some rebuilding of relationships to do because of disappointments.
  • I want to reestablish market leadership for years to come.
  • I’ve been working the USAF tanker for nine years. I’m not sure we have seen the last episode.


  • (On 777 rate decision: orders have been lacking.) We anticipate new orders this year, market is coming back. If we made announcement in April, rate increase would be in 2011. We don’t want to go up to six or seven airplanes then come back down. The A350 will be a good airplane but we think we have a lot of good years of production on the 777-300ER left and we are figuring how to make this more competitive.
  • Expects 787 certification soon which will allow engineers and FAA to come on the airplanes.
  • (On 737 rate decision.) We are over-committed in 2012, airlines will say they market is coming back, not too many wanting to defer deliveries, so may need to increase rates.
  • (737 orders held by troubled lessors.) Trend in airline operation is toward leasing and if some lessors wash out, others will step in. Our friends in Toulouse announced a rate increase today.
  • (If announces new product [737RE]): Demand for 737 Classic held while 737NG ramped up because we were in an up cycle. Hope for same scenario if proceeds with RE.

8 Comments on “Boeing’s Albaugh at JP Morgan conference

  1. “We have to fly each of six airplanes about 90 hours a week.”

    Is this possible/correct? that’s an average of 12.8 hours of flight time a day

  2. I believe that there will be different certifications for the Trent engined and GE engined planes.

    The Trent require less than the 3000 hours indicated by Boeing and will probably be certified first.

    This is just an educated “guess” but has some basis to it.

    What I am suggesting is that there is still some lag time in the program carved out by Boeing Testing and some early certification would change the nature of calculating the hours needed per plane.

    Perhaps someone else could add better information to this response

  3. Additional thought: The need to fly 500 hours per week or 16.6% of the total estimated hours required, may well take place during the last week or two of testing when each plane is needed to fly for extensive time periods as if it were flying back and forth from the US to Asia and making frequent roundtrips/turnarounds.

    Demanding a craft to fly so many hours in a week does not seem inappropriate for the completion of a certification process.

    With 7 or 8 months left to test and with six planes to be in the air by April there seems to be adequate time if all goes well .

    Guessing at a need for an additional 2400 hours over a 8 month period requires 300 hours per month. That translates into 50 hours per month per plane.

    This does not seem like an obstacle considering that ZA001 has already logged in close to 200 hours.

    Again, please correct or add to this analysis

  4. Albaugh says: “Expect 787 certification soon which will allow engineers and FAA to come on the airplanes.”

    As I recall, last year the 787 static test frame was failing well below the amount of wing load required for certification.
    A patch was applied, but after applying the patch only nominal wing load was tested, not the ultimate stress test (150 percent of nominal load) required for certification. So there is a certain possibility the 787 will not pass that test and miss certification (except the FAA somehow allows Boeing to omit that test).

    • Not the final cert for commercial passenger transport
      but some interim limited certification?

      I don’t remember much discussion in this direction during
      A380 proving. Is there so much difference in how FAA and
      EASA handle this?
      So they are still flying with a 2 person crew?
      Actually impact may be low with remote control and most
      data being streamed via telemetry.
      What activities would actually require further personel?

      As the ultimate load test has a good chance of ruining the specimen
      for any further tests the assumption is that that test will be last.

  5. I doubt Boeing would be moving foward with the production of 787’s if they honestly believed that they would not pass the ultimate load test after all the engineering studies and the appropriate side body fix.

    So far the flight testing has coroborrated that the major structural elements are conforming to the model and the difficult issues are probably behind them.

    The ultimate load test stands little chance of ruining the specimen and I believe I read where it will be exercised in the not too distant future

  6. “The ultimate load test stands little chance of ruining the specimen and I believe I read where it will be exercised in the not too distant future”

    Being viewed as a once in a lifetime event the
    ultimate load test allows for limited destruction
    but not a catastrophic failure. With a more straightforward history even a failure just below
    150% would probably not require a retest ( see the
    EASA acceptance of the respective A380 test )

    The chance for a loss of integrity exists.
    Nothing to get excited about. But it certainly should
    influences test ordering 😉

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