Boeing’s next five weeks

The next five weeks should be pretty exciting for Boeing–and significant.

Last week, the company received certification of the 747-8F from the FAA.

Before the end of the month, the Board of Directors is to receive from Boeing Commercial Aircraft the details of the 737 re-engine program (we sure hope marketing comes up with something better than “NE737”)**; we actually have learned the date of the BOD meeting, but will honor Boeing’s policy of not revealing the date). At this meeting, Authority to Offer the 737RE is expected, with details of just what the airplane is to follow to customers and the public (not sure of the timing).

At that point, we’ll be able to see just how well the 737RE stacks up against the A320neo and how creative Boeing’s engineers have been in taking a 1960s-generation airframe and bringing it forward to the 21st Century.

Certification of the 787 is still expected this month.

Then beginning in September, we should see delivery of the 747-8F to launch customer Cargolux. We expect this in the first half of September. Then, in the second half, we anticipate the first delivery of the 787 to launch customer ANA.

At long last, Boeing can then start to see some incoming cash flow from the 747 and 787 programs rather than only outflow. It will be well into 2012 before substantial inflow will be realized, of course, and ramp of of 787 production still worries Wall Street. But after years of little else but negative news from the 747 and 787 programs, we look forward to Boeing Commercial Aircraft making some real progress in its airplane programs.

While we were disappointed Boeing in the end elected to proceed with the 737RE instead of a New Small Airplane, the decision allows Boeing to concentrate on the development of the 787-9 and the potential 787-10; as well as 777 enhancements.

**One of our friends on Wall Street points out that “ne” is accepted in Scrabble for “nee,” the description often associated with the maiden name of a married woman (as in Mrs. Smith, nee Jones). New name, same person, our friend noted. The inference, of course, is that the NE737 is just a new name for the same airplane. Another reason for Boeing to come up with something more creative.

11 Comments on “Boeing’s next five weeks

  1. I am not so sure that the Boeing Board can or will approve the 737RE program
    AND decide on the 787-10 and or a new or heavily modified 777 program, all
    within this decade, to cope with the challenges from the A350 program,
    especially after the very serious cost-overruns with the 787 and 748 programs!

    My prognoses is, that the 737RE will get approval to proceed, subject to AA
    and many additional orders soon afterwards, no 787-10 now if ever, because
    it may well be eclipsed by an A350 variant and than later in the decade maybe
    an all new 777, also because of insurmountable pressure from the A350!

    Why, because aviation history confirms that in most cases, the manufacturer who
    came on line second with a particular aircraft type, usually won in the long run!
    Examples; the 707 after the Comet, initially the DC-8 after the 707-100 and only
    by drastic action by Boeing and the threat from PAA to go all Douglas, the 707-300
    after the DC-8, the 727 after the Trident, the 737 after the DC-9/BAC111/Caravelle,
    the 747 all by itself, because it was much too big (300%) compared to the 707’s
    and DC-8’s it was supposed to replace, opening the door to the Tri-motors from
    MDD and Lockheed who destroyed each other, while the 747 survived, because
    by the time it was the right size a/p ten years later, it was too late for any other
    manufacturer to build a better a/p, at the same cost.
    The most recent example of the above trend and still proves the point, is the 777,
    which was launched in 1991, three years after the DC-10/A340 and not only
    destroyed both of these a/p’s, it eventually became the bestseller it is today in
    that category and the reason why Boeing must now build a new 777 soon, a
    modified a/c probably not being adequate to stay ahead of the A350’s!

  2. Scott, you have made your opinion clear on Boeing’s decision to go with a re-engine instead of developing a new one now.
    Question is, do you really believe they could have weathered the storm of the next 10 years or so?
    Plus do you not think it would have been dangerous for Boeing to introduce an all new aircraft in service when the competitor could then introduce something newer, and one would expect better, within the next few years? (sort of in line with what Rudy says in his comment, even when he is talking about widebodies)

    • If, as Herb Kelleher suggested, Boeing could have introduced the NSA with an EIS of 2018 (or, in our view, even in 2017), it would have been a master stroke and blown NEO away. Although Airbus is convinced any NSA (theirs or Boeing’s) would have had only a 3% DOC advantage over NEO, Boeing’s analysis had the advantage at closer to 16%, all-in including ownership costs. (One can argue with the numbers, but that’s what it was.)

      The issue that Jim Albaugh raised– nobody could tell them how to make 50-60 composite airplanes a month– may or may not have been the real issue at hand. Our information is that Boeing had not yet definitively settled on the composite structure (fuselage–the wings apparently had been settled as metal-based), though all sourcing agreed it was the “baseline” preference. Aluminum Lithium was still an alternative, and Al-Li would have been easier to produce at 50-60/mo and with engines available by then, why not go with an Al-Li NSA?

      We believe the underlying reason fundamentally is that with the delays of the 787 and 747 programs, the cash out-flow and delayed cash in-flow, and the uncertainties surrounding the 787 ramp up, the Board probably wasn’t going to approve an entirely new airplane program regardless of the composition of the fuselage. But would Boeing say this publicly? Not likely, so the other reason was named. As we noted in a previous column, the underlying decisions about how to build the 787 and the industrial partnership led to the production debacle and screwed up Boeing’s product strategy. McBoeing at work. But this will never be admitted.

      • I think by launching NSA Boeing was afraid of
        – Losing major customers short term
        – Being eclipsed by Airbus A30X introducing matured versions of rushed

        NSA technology a few yrs later,
        a 2017 / 2018 EIS of the NSA would likely be received by “yeah right” responses all over the industry, including internally.

        IMO Boeing is forced to communicate and plan very conservative for the next 6 yrs. They kept overpromising, neglecting writing on the wall and dismissing airline signals so badly during the last five years, it takes time to restore credibility. Optimism turned into dishonesty.

  3. Hopefully lots of good & productive events at Boeing in the next few months!

    IMO Boeing HAS to come up with something real good in the 300 seat segment. I prefer a real lean, efficient, range restricted 787-10 over a reworked but still heavy 777-200ER/LR upgrade.

  4. I agree, keesje, I hope Boeing does have a string of good & productive events between now and the early part of next year.

    I don’t know if Boeing would go ahead with the B-787-10. It depends on what they decide to do with the B-777, and if they keep the -200 versions (except the freighter) in production. If they did build the B-7810, it would go almost head to head against the A-359 in seat count and cargo capacity, but not in range. The B-7810 would need some wingtip extensions to increase the span, but not a whole new wing.

  5. With it’s two major troublesome projects almost simultaneously reaching fruition, these are indeed exciting times for Boeings commercial arm. The eventual release of resources to other projects will see major movement toward the engineering challenges demanded for it’s Golden Egg 777 & the much anticipated data that should ensure the 737RE remains competitive.

    From over here we wish them well & gods-speed.

  6. In my comments above, I omitted to include two very important additional
    examples of the second a/p launched in a certain category, usually winning
    the race in the end.

    In addition the A340 and MD-11, the 777 also destroyed the A300-300, but
    due to the 777 initially being underpowered, the A330 came into being, but
    was almost eliminated after the launch of the 787!
    The 3 year delay on that program gave the A330 a much longer life AND
    enabled Airbus to launch the A350.

    Also, because Boeing did not see the potential for the A380, until it was too
    late, the 747-8 may also become a victim of the same phenomena, because
    the A380 was too early, like the 747 and by the time the market is ready for
    a VLA 600+ a/p, the 747-8p will be considered an OLD A/P, as SIN and JAL
    have already concluded and unfortunately, will never get up to speed!
    The 747-8f on the other hand, will be the best freighter aircraft around for a
    very very long time, initially hampered by converted -400’s, but soon in
    greater demand, due to fuel price hikes!

  7. Has JL ordered the A-380? No. JL got rid of their B-744s due to their bankrupcy, they cannot afford the B-748, but have bought the B-77W. SQ never considered the B-748, and they were the launch customer for the A-380.

  8. The main reasons why the A380 will start selling in much greater numbers
    and to many more airlines soon, including JAL, are:
    1. The rapidly increasing CONGESTION at major airports, primarily in the
    Pacific basin, where the biggest traffic increases in the world are forecasted.
    2. The fuel burn/passenger and related seat-mile cost advantages, especially
    with the A380STR, already projected by several airlines, for an intro date
    during the second halve of this decade.
    3. The 747-8P cannot match the above two advantages for the A380 and has
    no stretch capability, even if Boeing would want do so, which they do not!.
    4. Today’s A380 is only 30% bigger, 450-550 seats, compared to the 747-400,
    while the 747 was 300% bigger,150-450 seats, compared to the 707&DC-8
    airplanes they were/are supposed to replace!

    So, while the 747 took 10 or more years to fit market requirements, the A380
    is likely to so in less time, because of the enormous growth rates fore-casted,
    primarily for the Pacific basin, the ME and S. America.

  9. “In addition the A340 and MD-11, the 777 also destroyed the A300-300, but
    due to the 777 initially being underpowered, the A330 came into being, but
    was almost eliminated after the launch of the 787!”

    A340 sold nearly 400+, almost all in service, not bad for a destroyed aircraft.. The A330 was never destroyed. 500 were ordered, after the 787 was launched & still going strong. A330-300 sales ended the 777-200ER succes story.

    If GE and/or RR decides to finance new engines for the 330, I do not know what will happen. With Airbus / A350 customers increasingly moving from A350-800s to -900s anything is possible.

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