Albaugh announces more than 600 commitments for 737 MAX

At an appearance with Goldman Sachs today, Jim Albaugh, CEO of Boeing Commercial Airplanes, announced there are now more than 600 commitments for the 737 MAX.

  • Announced what we reported weeks ago: Boeing selected 68 inch fan for CFM Leap 1B. Also talking to CFM about a custom core for the engine.
  • Striving for an EIS earlier date than 2017.
  • Doesn’t want team to use “simple” and “re-engine” in the same sentence, but wants to minimize changes.

Boeing slide from Goldman Sachs investors’ conference Nov. 3, 2011

  • I want to be more responsive to customers we have [by increasing rate]. We drive customers to competitors if we don’t have availability.
  • We certainly over-promised and under-delivered on 787. The composites are coming together very well. I’m not going to tell you getting up to rate won’t be a challenge. Biggest challenge is in Charleston. It’s month-by-month. I see a very detailed dashboard on supply chain.
  • We have brought a lot of 787 work back in-house. We have 500 engineers who have nothing to do but to drill down…and manage our suppliers as if they were in our factory.
  • Final assembly won’t be in quite three days, as originally promoted. But we are pleased we now own Charleston because we have control over it. If we didn’t we wouldn’t be as far along as we are today.
  • I’d be getting ahead of myself if we are going to do the Dash-10, but I think we will. It won’t have the range but it will have the value.

14 Comments on “Albaugh announces more than 600 commitments for 737 MAX

  1. The comment …
    “We have 500 engineers who have nothing to do but to drill down…and manage our suppliers as if they were in our factory.”

    … kind of lets you rethink the economy of outsourcing. Boeing sheds off engineers and workers in order to re-employ them as managers. The competence and technology however stays with the supplier. And even more odd: as the supplier has to have his own engineers, the number of overall manager positions increases. these are often well-paid but add limited to no value.
    Overall, the system is less efficient: more people do more pointless stuff like sending Excel-tables with deliverables around, defining milestones, annoying each other with reports and doing quite a lot of accounting.

    This isn’t a Boeing-specific problem, but you see the same at any company. Might work for some, I think cutting edge technology is created most efficiently when the people from design down to manufacturing (of a particular component) are sitting on one floor or at least building/facility/county. And when they have no managers in between them.

    Not exactly the spirit of Kelly Johnson’s 14 rules.

  2. And yes, the B737MAX will win big in the market: the disadvantage compared to the NEO is small enough to make it unattractive for customers with large installed fleet to switch aircraft.

  3. If Boeing works with CFM to get a custom core for the 68″ engine, they could match the smaller fan with a smaller core. By building a specific engine optimized for lower overall thrust, Boeing can exploit their advantage of lighter frames on the MAX 7 and MAX 8.

    Aviation Partners has come out with ventral winglets and blended raked tips. Will these be incorporated? The 787 started with the shark fin tail, are there any savings at the tips of the vertical and horizontal stabilizers?

  4. Good to see the MAX is getting more commitments.

    68 inch is 10-13 inch less then the NEO’s LEAP and GTF’s.

    I expect no physics miracles, 10+ inch is significant in terms of BPR and sfc.

    It will freeze in hell before Boeing would address / admit this & probably will focus their marketing on different aspects such as “typical” operating costs, full of carefully selected assumptions.

    BTW I fully agree on Boeing move to go with the MAX. I see it as an interim solution.

    • I think Airbus and Bombardier have an advantage with the larger fan. What the real gain is remains to be proven. Obviously there is a point of diminishing returns. I looked at big twins and ranked them in ratio of fan area/MTOW. 788, 358, 359, 772ER, 789, 773ER, and dead last the A350-1000. So any concerns with the MAX could be aimed at the 350-1000. If the 773ER gets refreshed, will they go larger than the record 128″?

      • Propulsive efficiency seems to go with diameter / thrust.
        (proof/equations was over at airliners.net, my first order assumption was area too, well, wrong 😉

        Thrust and MTOW are linked via aero/wing efficiency ( first order : wingloading.)

        Lack of propulsive efficiency must be compensated for with
        better core efficiency for a similar sfc.

  5. Scott, as you have mentioned striving for a pre 2017 EIS

    The announced structural changes are pretty much as we had calculated, we additionaly expect more a host of further airframe refinements.

    The major pitfall still sits with the power plant, our calculations indicate that overcoming the potential for engine FOD still demands quite extensive structural changes, the challenges these pose have neither been mentioned or importantly as yet not properly resolved.

    Until concrete solutions are forthcoming the spirited six hundred commitments will remain omminously vague.

  6. Here the guru’s thoughts on production/mkts/the fragility of today’s commercial mkt.

    ahttp://www.richardaboulafia.com/shownote.asp?id=349

    • I always appreciate the monthly letters of Aboulafia. But his predictions aren’t very reliable. His point of the particular letter is however noteworthy: the hike in production rates is not reflected by the greater economic picture.

  7. Pingback: 737 MAX ‘commitments’ and what these mean « Leeham News and Comment

  8. GO 737MAX GO, you are halve way thru the number of NEO’s on order,
    and with A LITTLE BIT MORE LUCK, you will surpass their number of
    airplanes on order!

    • While Boeing claims some 600 commitments for the MAX, we have no idea how many commitments Airbus currently has in the bag – which are likely to be announced in Dubai. Qatar alone is expected to sign for 50 frames.

  9. I foresee more NB orders in the next 12 months. Carriers like AF/KL, UA, US, BA/IB, Easyjet have to secure longer term slots.

    So both will be “over-ordered” and slots trading will become a business in itself..

    It seems for Airbus the supply chain is a bottle neck. E.g. ramping up the Landing gear or GTF production may not be as easy as throwing in more money

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