Boeing’s Albaugh hints at 12/mo rate for 787

The chief executive officer of Boeing Commercial Airplanes Wednesday hinted at increasing production rates of the 787 beyond the committed 10 per month to 12 a month.

Jim Albaugh, speaking at the Credit Suisse Aerospace conference, reiterated plans to meet the oft-stated target of assembling 10 787s per month by the end of 2013.

“The 787 has been a tough program. Everybody knows that,” he said, citing the variety of difficulties the program has experienced. “All those were difficult tasks. We have more ahead of us. We have to get up to rate. [Plan] Z24 still has us going to 10 a month by the end of 2013. My view is that if we can get to 10 we can get to 11 [and] if we can get to 11 we can get to 12.”

The recently issued Z24 obtained by Flight Pro shows a sharp decline in planned production over Z23.

  2012 2013 2014
Z23

61

95

120

Z24

45

66

119

 

“We held the rate at two for quite a while and we had a couple of pauses as you know,” Albaugh told Flight Pro after his presentation. “Z24 does move some things to the right, but we still get to 10 a month at the same time, which is the end of 2013.”

Albaugh said the plan is to get to a production rate of five per month by the end of 2012. Rate bumps won’t happen before officials are convinced rates are stabilized.

The production rate does not reflect delivery rates, however. Boeing has more than two dozen aircraft produced but parked at its Everett (WA) assembly plant awaiting rework. Albaugh declined to specify the delivery rate for 2012, however.

“I know precisely [how many deliveries there will be] but I am not going to tell you. When we come out with our guidance for 2012 we give you some clarity on that,” he said.

Albaugh said Boeing’s Charleston facility “has demonstrated they can go beyond 2 ½ a month,” and he suggested the plant’s first 787 may be ready for delivery ahead of the planned June schedule.

 

35 Comments on “Boeing’s Albaugh hints at 12/mo rate for 787

  1. I don’t know if Boeing can get to 12 B-787s per month or not. It seems to me the production system already has a built in bottleneck they cannot get beyond. The bottleneck is the B-747-400LCF airplanes, there are only about 4 of them. Assuming one is always out for maintenance, that leaves just 3 to operate worldwide bringing in parts and subassemblies.

    Boeing will need to work that out somehow. Maybe they can modify additional B-747LCFs? Maybe they can work out some shipments by rail or ship?

    Airbus has it a little easier as their A-380 parts shipment lines are a lot shorter in distance. Airbus has 5 A-300F Bulgas, and a series of canals, rail, and roadways to get all the parts and subassemblies into France.

    But, the key to building any of the new ‘international designs’ is always going to be logistics.

  2. The problem is certainly not with the LCF…

    And for Airbus note that the 5 Beluga support the production of the whole Airbus line, including the A380 (like the tail) but also the A400M components and other EADS companies such as the NH90.

    I know that Boeing is not limited by its fleet of LCF

  3. “All those were difficult tasks. We have more ahead of us. We have to get up to rate. [Plan] Z24 still has us going to 10 a month by the end of 2013. My view is that if we can get to 10 we can get to 11 [and] if we can get to 11 we can get to 12.”

    I wonder how many times one has to hit the wall before conservatism in this kind of optimistic forecasting starts to play a role.

      • and pessimist don’t spend it 😉

        There is an optimax point of balanced optimism and pessimism which is more than just plain “realism”.

    • KCTB. many optismsctic animals lay by roadside. I agree optimism is very important. However if you have been over promising for yrs, IMO it’s a bit rich to state a current very ambitious planning will likely be beaten. I hope we are surprized by Boeing in a few yrs.

      • There is a difference between optimistic action and projecting optimism.
        Boeing management had a burn through/short circuit from projecting to acting.

      • Then the question becomes ‘how many optismsctic animals did make it across the roadway?’

  4. Plan Z24 lags Z23 by 46 assembled frames at the end of 2014.
    Then going to 12/month instead of 10/month they will take slightly over
    2 years to recoup that.

    Fuselage join rates are a moot point if completion to a deliverable state cannot be achieved
    for those frames.

    Would Boeing fare better if they suspended regular production for some time while
    changes are incorporated into the pre join section production while fixing the pile up in
    the meantime?

    • How Boeing will handle the several dozen parked planes needing rework is crucial to an understanding of the potential delivery schedule as well as how they will coordinate production.

      I wonder if UWE’s suggestion is actually feasible. Have no idea about the efficacies of production but certainly wonder why the backlog is not being attended to as quickly as possible.

      Perhaps Jon can do a report on the different aspects of this situation and what its impact is on future deliveries.

      • Additional consideration: Doesn’t the arrival of the Gen X engines as well the Trent B have bearing on the completion of the parked planes. I doubt that incorporation can be completed without the installed engines and whether it makes sense to do the rewoek and incorporation in two stages.

      • Perhaps this one of the reasons ZA001 was decomissioned and will be stripped of her engines? They would certainly be useful for ferry flights from Paine to San Antonio of RR spec’d aircraft..

      • As Uwe has pointed out there are 46 more airplanes in Z23 than in Z24. But both “Z-Plans” are production plans, not delivery plans. The 46 airplane difference Uwe points out in production is about the same number of incomplete B-788s sitting on the ramps, closed taxiways, and closed runway.

        So, could it be Boeing has a seperate plan for delivering these B-788s? Z24 shows Boeing now plans on building 45 new B-787s in 2012, 66 in 2013, and 119 in 2014. But Boeing has not made any announcement changing the delivery schedule, which IIRC is 60 in 2012, 100 in 2013, and 120 in 2014 and beyond. Then again, Boeing also planned up to 20 B-787 deliveries in 2011, and they will only meet 5-6 of that plan.

      • I have this little feeling that beyond technical issues Boeing may have bookkeeping interests that would speak for keeping
        the pileup for some time.
        currently each of these planes presents a quite large value in the 787 project inventory. Material value ( or even list price) plus all extra effort just added together ( my understanding).
        The moment one of these planes is delivered ( for ~$70m + engines ) the balance will evaporate.

  5. The Z24 schedule leaves more questions than answers. 2013 shows the delivery of 66 aircraft. If the production rate is at 5 a month by the end of 2012, that would translate into a delivery of 60 787s during 2013 even is production didn’t ramp up at all. If the production rate is ramped up the total deliveries should easily exceed 66 aircraft. If the rate is 10 a month in December and just suddenly jumped to that number from 5, the total deliveries would be 65. A jump from 5 to 10 in one month is nonsense, so we must assume that production rates will ramp up gradually during the year, which throws the total projection into question. For the sake of discussion, let us assume that the rate goes to 6 in February, 7 in May, 8 in August, 9 in October, and 10 in December. That would translate to 88 aircraft. A different assumption, an average of 7 a month – that is 84 aircraft. But Z24 says the projection is only 66 aircraft. Something is wrong with Mr Albaugh’s arithmetic or with plan Z24. I expect the plan is more accurate than the executive who has too often over-promised.

    The difference between Z23 and Z24 drops deliveries in 2012 and 2013 by 45 aircraft, a drop in projected revenue for Boeing of 6 billion dollars over 2 years. The gradual ramp-up of production envisioned in Z23 suddenly becomes a sharp production increase in 2014 in Z24. The sudden jump in production should be suspect to anyone who looks at the numbers as being virtually unachievable. Z25, whenever it arrives will certainly show decreased production in 2014, and another reduction in projected revenue.

    • I’ve plotted the numbers and assumed that the per year numbers would not directly translate into constant per month values jumping from year to year but in an exponential increase in production adding up to the given number per year.
      Z24 would imho indicate a later but faster rise. i.e. a better learning curve. Lots of values have been bandied about from significantly faster than the 777 to well below the 777.
      I would not believe any Boeing projection in that context and the observable start is completely muddied by various disturbances.

  6. BAInvestor :
    Additional consideration: Doesn’t the arrival of the Gen X engines as well the Trent B have bearing on the completion of the parked planes. I doubt that incorporation can be completed without the installed engines and whether it makes sense to do the rewoek and incorporation in two stages.

    The decomissioning of ZA001 and ancillary information about the first Air India delivery posted by flightblogger points to an interesting explanation:

    Essentially the FAA certified not the primary flight test prototypes but the first delivered (ANA) plane ( and they did additional testing on that frame). Because that plane was the first specimen that conformed in any acceptable way to production standards as designed
    and having the advantage of a complete paper trail.

    The GenX cert is delayed by the same situation/issue. Boeing must provide a complement to the ANA plane ( here it is for Air India ) powered by GenX to allow final certification flights.
    ( i.e. even the GenX hung current testflight specimen seems to be uncertifiable ?)

    • Uwe, This adds to the complication facing the rework and incorporation work.

      Are the engine manufacturers confident that they can meet a schedule that does not delay production and delivery ? Is there confidence that engine delivery will not impede Boeing’s schedules ?

    • No sir, that is incorrect. All RR Trent-1000 powered B-787-8s are certified to fly. ZA-001 through ZA-004 are all included in the FAA type certification, and the word “experimential” has been removed from them. Only the GEnx-1B powered B-787-8s (ZA-005 & ZA-006) are currently not certified to fly without the word “experimential” on them. Actually the airframes are certified, so is the engine, they are just not certified as a combination, yet. That will come soon.

      When certification of the entire line of B-787-8s is completed (with the GEnx-1B or RR Trent-1000 engines), the only difference between the cert for the 6 flight test airplanes and those airplanes delivered to the airline customers will be the flight test airplanes will not be certified for commerical passenger operations. They can still carry potential customers, company employees, FAA and government employees, politicians, or military personel. They just cannot be charged for those flights. In fact isn’t ZA-003 doing all of that right now on its world tour?

      ZA-001 was decommissioned because it is no longer needed, not because it is not certified. Boeing will have 6 B-787 flight test airplanes, they only need one or two of them. I suspect that of the remaining RR powered airplanes, one will be kept, possibly ZA-003, and one of the two GE powered airplanes, either ZA-005 or ZA-006. The remaining 3 airplanes will also be decommissioned, just like ZA-001 was.

      • Well, the EASA cert references one 787-8: D061Z022-02, Revision C, dated 11 August 2011, and Major Level 1 Change

        The FAA doc “T00021SE Rev 1.pdf” has:
        Model Eligible Serial Numbers
        787-8 34488
        (34488 is the ANA frame, line number 008 )

        All the frames currently registered with the FAA are type:Experimental. ( The ANA frame doesn’t have an N reg anymore )

        could you elevate your prose with a reference link or two please?

  7. Uwe :I have this little feeling that beyond technical issues Boeing may have bookkeeping interests that would speak for keepingthe pileup for some time.currently each of these planes presents a quite large value in the 787 project inventory. Material value ( or even list price) plus all extra effort just added together ( my understanding).The moment one of these planes is delivered ( for ~$70m + engines ) the balance will evaporate.

    Yes, but the time it is delivered also produces income. Your point is that the income is less than the carried value so it serves as some accounting disadvantage. None the less, deliveries and income are carefully watched and are a positive regardless of the accounting regime.

    • I think the point is that while they are positives, due to accounting they can actually be negatives, and the value of the cash-flow generated may not be enough to make up for the value of assets removed from the balance sheet. The problem would not exist if they had to mark-to-market, I guess. But then they would have realised the hit already, which may have impacted profitability.

      • Wouldn’t there be a footnote on this in the Annual Report indicating the writeoff schedule for the development ( 1100 planes) thus clarifying the discrepancy and perhaps indicating the “pseudo ” asset writedown that colors the actual impact of a sale.

        In real estate, when depreciation exceeds income, it distorts the picture but with clarification, the cash flow is made clearer

  8. Z24 is a red herring. I guess Boeing has no interest in ramping up production right now as this would only produce a pile of compromised airplanes that are not well appreciated by customers and don’t look good on the balance sheet. All the band-aid (SOB join, rear fuselage frames, windshields etc) certainly has a detrimental impact on book value.
    It seems logical to me to wait for the implementation of 787-9 changes before truly ramping up. That may take a while though. Judged by the extent of engineering changes, 787-9 certification could more closely resemble that of a new airpane type than that of a ‘simple’ derivative.

    • Reducing the disorder density is a completely acceptable approach imho.

      Would delivering an in all essence shortened -9 aka 787-8Mk2 be an
      acceptable aproach to satisfy customers in the long run ?
      Current ( and expectable future) delays have reached a dimension that
      needs some very innovative handling strategy.
      Unfortunately Boeing seems closely mated to always overpromising the next
      step.

  9. The give away is Boeing distinction between “production” (ie half built planes) and “delivery” (customers can actually fly the planes). Until Boeing recognises that production means planes in customer hands, nothing Albaugh says is worth a hill of beans.

  10. and if we can get to 12 we can get to 13
    and if we can get to 13 we can get to 13
    and if we can get to 14 we can get to 14
    and if we can get to 15 we can get to 15
    and if we can get to 16 we can get to 16
    and if we can get to 17 we can get to 17
    and if we can get to 18 we can get to 18
    and if we can get to 19 we can get to ad nausea

    useless management babble

    • Well, no FF, production means airplanes built or building, but not delivered. ikkeman, Boeing might be able to get to 12 B-787s per month, if the tea leaves fall right, but as I said in my reply #1, Boeing will face a bottleneck in the logistics chain, that limitation being the (relitively) small fleet of B-747-400LCFs. So I just don’t see them getting beyond 12 per month, and even that is really streching the logistics train. They may just, by default have to settle for no more than 10 per month, as originally planned. Perhaps a cheap solution would be to buy or lease some of the USAF C-5As being retired to AMARC? The B-787 sub-assemblies are not real heavy (for heavy lifters like the C-5A or the B-747F), they are just bulky.

  11. KC135TopBoom :Well, no FF, production means airplanes built or building, but not delivered.

    Which is why it is not worth a hill of beans, unless it comes with assurance that production planes no longer have to go through re-work. Does anyone remember when that is supposed to happen?

    Albaugh’s statement about knowing precisely how many deliveries there will be is unlikely to get more than a wry smile out of his customers is my guess. Unless precision is the term used for the delivery failure this year (anyone remember the various guidances?).

  12. The big talk from both Airbus and Boeing of major increases in production rates (Airbus -A320 family, Boeing -737 family and the 787) seem to gloss over the supplier problems existant in the world today. Seats are very difficult to come by and I keep hearing that galleys and lavatories are becoming increasingly difficult to obtain. It seems there are not enough firms supplying these items.

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