Dec. 27, 2017, © Leeham Co.: Boeing had an outstanding year.
For the first time since 2013, it booked more sales of the 787 than it produced, the so-called book:bill ratio.
Total net orders through November were 633, almost twice that of Airbus through the same period.
This excludes orders announced at the Dubai Air Show which have yet to be booked.
The only lump of coal, coming just before Christmas: Airbus won a major deal from Delta Air Lines for 100 A321neos plus 100 options.
Other events propelled Boeing to an outstanding 2017.
Boeing won an appeal at the World Trade Organization that overturned a finding the $8.7bn in tax breaks granted by Washington State for the 777X were illegal. (In reality, the US government won the appeal, but we all know this case was Boeing’s.)
This was a major victory for Boeing. The WTO found the tax breaks to be a “prohibited” subsidy. The appeal overturned this finding.
A previous ruling that tax breaks issued in 2003 from Washington for the 787—on which the 777 tax breaks were based—found these to be “illegal,” which is different than “prohibited.” “Illegal” means the subsidy can be cured. “Prohibited” means it’s not allowed at all. This earlier finding remains under appeal.
Boeing also swept a preliminary win the US Department of Commerce, which concluded Bombardier received illegal subsidies and engaged in price dumping in its C Series program. The DOC preliminarily levied a 300% tariff on the C Series sale of 75 orders and 50 options to Delta Air Lines.
The case moved over to the US International Trade Commission, where hearings were held starting Dec. 18. A decision is due next month.
The first 737-9 delivery is this year. Flight tests for the poor-selling 737-7 begin this year. Development continues on the 737-10.
Production rates go up to 52/mo. The transition from the 737NG to the 737 MAX at the Renton production plant picked up speed.
All-in-all, things are smooth sailing for the 737.
This airplane continues to be on life support.
The production bridge for the 777 Classic to the 777X looks in good shape. Line production of the 777X begins this year. New production techniques are being used for the 777X and Boeing has had some teething issues as it’s tried some of these out on the 777 Classic line.
Nothing stands out as a problem, other than the lack of sales for the 777X, which have been stalled in recent years.
The first 787-10 gets delivered this year, rounding out the family. It’s steady as she goes.
Here’s where the real interest level lies when it comes to watching Boeing in 2018. Will they or won’t they? goes the refrain.
Will Boeing launch the NMA program this year, or not?
Conventional wisdom says yes, if it wants to deliver the airplane for entry into service in 2024/25. History of all the recent airplane programs requires a seven-year launch-to-EIS timeline. Boeing wants to cut this to six years—but is this a wise target, given the 787 experience (which had a four-year timeline)?
If not 2018, then when? The year after is also mentioned (1Q2019, to be specific) as a launch timeline.
While Boeing is publicly sticking to its 2024-25 timeline, LNC is told by the supply chain and customers that Boeing is telling them 2027 is now the target date—a report Boeing calls “inaccurate.” But if the reports (plural) are accurate, then a program launch won’t happen in 2018, or even 2019.
The business case of the NMA hasn’t been closed. The size of the market remains a matter of debate. Getting costs down to a point where Boeing can sell the airplane starting with a 6 or a 7 is a real challenge. Wrapping Boeing Global Services into the business plan appears to be crucial.
And then there is the Airbus response.
Airbus publicly refers to an A321neo Plus, which would eat into the need for a smaller NMA, of the anticipated two-member family. Airbus also has a new design ready to go, if needed.
Finally, Bernstein Research—which has been skeptical of the NMA all along—floated an idea that takes the NMA design but reduces the range to a maximum of 4,000nm instead of the most commonly talked about 4,500nm to 5,000nm.
The NMA isn’t a slam-dunk by any means.