May 13, 2015: For the first time Boeing has detailed how it plans to bridge the production between the 777 Classic and 777X, according to aerospace analysts attending the May 12 investors day.
Boeing previously said it needs to sell 40-60 777s a year to maintain current production rates of 100/yr (8.3/mo) to the introduction of the X. This pledge has drawn a great deal of skepticism from analysts and this column.
Boeing’s detailed explanation, its first, does little to lessen doubts.
Boeing said it will feather the X into current production rates, with the X becoming the equivalent of two or three Classics, thus, it claims, maintaining current rates, according to Wells Fargo.
Boeing also claims that it will maintain rates by managing its skyline, advancing deliveries, according to Buckingham Research.
There are several problems with these claims.
backlog to advance orders to maintain rates. The numbers just don’t add up. Further, customers would have to adjust fleet and capital planning, not out of the question but challenging nonetheless.
The 777 Classic program is under pressure. Sales are hard to come by and pricing is dropping. Boeing initially said it would maintain production rates through the EIS of the X on 2020. Few believed this could be achieved. Boeing’s convoluted reasoning that it will is hardly reassuring.