Boeing sees >800 deliveries in 2018

Jan. 31, 2018: Boeing sees more than 800 deliveries and revenue approaching $100bn this year, as it provides guidance concurrent with its 2017 financial results. Revenue last year was $93.2bn.

The company repurchased $9.2bn in stock last year, continuing its shareholder value program.

Boeing continues to transition from the 737NG to the 737 MAX and the 787-10, now certified, will see deliveries begin rather than airplanes going to inventory. These events contribute to the forecast higher deliveries this year compared with the 763 last year. The 777 program is in transition from the Classic to the X models, lowering deliveries. The production rate for the 737 increases this year from 47 to 52/mo.

The earnings press release is here. The earnings call is at 10:30am EST. This may be accessed here.

68 Comments on “Boeing sees >800 deliveries in 2018

  1. So what is in reality left for development for now: 737-10, and as always trying to catch up on tanker program.

    Next in line: 797 I guess, BCA can’t stop here

    KR/Airboe

  2. Does Boeing have to buy back shares in a directly visible manner or can they go for “predatory” style trading to boost share values in the right moments ( like just now to cloak negative impact happenstances? )

    • Uwe

      Please explain “predatory style trading,” including how such activity could be used by a highly-visible public company.

      • Creating demand in situations of a potentially soft share value like after this Fridays decission on BBD.
        Previously Boeing had to start rumors to tide over bad news ( my favorite : Air Berlin buys more 787 just ahead of the NTSB report on burning batteries.).

          • Once is happenstance. Twice is coincidence. The third time it’s enemy action. 🙂
            i.e. if you see it often enough ..

          • Apply the same filter to all the data (i.e. all high profile companies) in an honest way and then see what you get.

          • US has laws and Boeing will follow them.

            Getting caught is a bad thing.

            If they think they can get away with it they would, but its all public and submitted.

        • Boeing has been buying back shares on a regular basis. This has no relation to losing bombardier trade case.

          If you want to be critical of it. It made (great) sense when the share was valued low. But at current share price and the situation Boeing finds itself in, it makes no sense at all.
          Unless you you’re in management and get a bonus based on the share price.

          • Yes, all too many companies are managed in large part for the near/mid term benefit of upper management and not so much for the long term benefit of the owners (shareholders). However that may be, Boeing shareholders are happy currently.

  3. With BAC increasing 737 production and AB also looking at increasing A32X production CFM must be under pressure to deliver engines?

    There is still a backlog of 430 B737 NG’s and 390 A32X CEO’s things must be hectic due to engine types and change over to LEAP’s.

    • In today’s tightly managed aviation supply chains, who would NOT be under tight pressure to “perform and deliver”?

      • Exactly. When you can’t get enough seats and toilets to deliver planes, it causes major headaches.

  4. Looks like the 787 deferred production cost came down by $560M during 4Q 2017. That’s 3 quarters in a row now with a decrease of more than $0.5B. At $2B/year it will still take over 12 years to zero out. At least it is going down. Perhaps since the 787-10 production integration is accomplished and they will start delivering this year, the decrease will get steeper.

    • It seems like all the classic targets for posters are slowly resolving themselves, next we will have an order for the A380, wait! What? And the Cseries will not be subject to tariffs, eh?? Scott, all contentious issues are resolved, better quit whilst the going is good

          • Rate is remains at 6 a years as orders are slow, maybe pick up a few but probably no enough to justify a rate increase.

  5. Working on the following numbers from the press release

    Number of planes delivered goes from 763 to say 813
    Revenue goes from $58B to say $60B
    Margin goes from 9.4% to greater than 11%

    So the average revenue per plane goes down from $76M to $73.8M
    But the average cost per plane goes down more than from $73.0M to $65.6M

    That seems like an impressive cost reduction. About 10%. Very aggressive.
    On the other hand I thought Boeing was working out of the initial prices for 787 so one might have thought that revenue per plane would go up.

    I know that the mix must be changing and so this calculation is too simplistic, but the numbers did stick out when I read them, so I did this back of the envelope analysis.

    • Backlog (over 5800 planes) is valued at $421bn in the report, less than $73million per plane. That’s a discount of more than 50% when compared to list price of backlog. theblogbyjavier.com also found greater than 50% discount for planes delivered in 2017. in 2007, it was found to be only 38%. Gains in productivity must have been tremendous to allow this huge price drop.

      • Offshoring.
        South shoring.
        Putting your WA workforce on notice.
        Squeezing the supply chain and then doing it some more.
        Commoditising the B737 towards volume / mass production.
        Reducing your R+D spend per unit of output.

      • Gains in productivity …

        I don’t think so.
        Most of that “energy” should be stored in the long time growing deferred cost bow wave.

        • 787 deferred cost is certainly an issue, but 787 backlog (658 units) amounts to less than 20% of backlog value (based on list price).

          Back in 2008, discount on planes delivered that year was 36% of 2008 list price. 9 years laters, discount is 53% for planes delivered in 2017 and 54.4% for backlog (I assumed the 36 767-2C frames in the backlog were not counted in Boeing Commercial Aircraft division financial report, otherwise it’s even worse). I would say quite a number of airlines are now able to order new 737 MAX with discounts (60%?) similar to the discount only Ryanair got back in 2002.

          Here is the detail of backlog list price value (as of 31st Dec 2017).

          Backlog List price backlog
          Model # million $/unit bn $
          BBJ2 2 85,8 0,2
          BBJ 2 85,8 0,2
          737-700C 2 85,8 0,2
          737-700 2 85,8 0,2
          737-800 333 102,2 34,0
          737-800A 34 102,2 3,5
          737-900ER 61 108,4 6,6
          737 MAX 4232 117,4 496,8
          747-8F 12 403,6 4,8
          767-300F 60 212,2 12,7
          777-300ER 72 361,5 26,0
          777F 30 339,2 10,2
          777X 326 420,8 137,2
          787-8 68 239 16,3
          787-9 419 281,6 118,0
          787-10 171 325,8 55,7
          Total 5826 922,5
          Earning report 421
          discount 54,4%

          • IMU last years ( and probably 2016 too ) sale offensive was “expensive” for Boeing.
            The initial batch of 737-10 are murmured to have gone for 1/3rd of list. 787 sales were probably not done by “strong pricing power” on Boeing’s side either. finally I don’t think they will get rich from their super 777X winged wonder.

            I’d like to see the comparable computation done for Airbus. Maybe some unexpected has the last laugh.:-)

          • I suspect they did fine on the 787-10.

            Nothing quite like it, slots available and proven by the -9

            The -8? Low prices, high costs, no commonality so cost stayed high.

  6. Hi ,
    Does someone follows what happens to orders declared in the press over time? Are they delivered in full? Can one rely on what is declared on all these air shows?
    David

    • David: Not always.

      Also you need the in depth follow up.

      They often are scheduled for 4 to 6 years from the day announcement.

      Some get deferred, some get changed.

      Some like Virgins A380 order never come off the books even though they are suspended “indefinitely”

      Delta carried Boeing 787s on the books for 10 yeas I think and finally canceled them.

      That may have been that they exchanged the down payments for 737-900s (they do have to make down payments and loose it if they just cancel)

      As its a long lead time, you can usually count on near term delivery schedule, but as we found out, the Japan company that had 3 ordered and one completed before the jig was up and Airbus had a white tail.

      • True, but not certain. If an airline folds those go away though they may also transfer.

        Its pretty fluid and you also need to know what year the confirmed orders are to be executed.

        One issue Emirates has if they are the only A380 customer, they have to take the entire production output (or Airbus has to figure out how to finance the aircraft they build and are sitting before delivery.)

        At times aircraft just sit while financing if figure out, Air India was a prime example but not the only one.

        Others like Air Asia are noted for kicking orders down the runway.

        Their wide body orders stared with A330CEO (they took some) , then they moved to A330NEO and now they want to change to A350.

        • and 787 and flying donkeys.
          rumors and FUD.
          At the core seems to be missing capacity.
          CEO to NEO and NEO is delayed.
          No idea about financing and are the rumors there to make that more difficult and a swinging treat in the form of 787+GECAS-Financing?

          • Anton: That is my favorite claim for Air Asia.

            They will log orders for A350-900, drop those for the 1000 (pickup the 1200 if that is offered ) and hen convert them to A380 (assuming still in introduction)

    • I am biased. I love the looks of the 747F and the 747-8F is the best looking of all time, or close

      Maybe the DC-8 Stretched is a co cool.

      A340-xxx was a good looking bird to.

    • I wonder how much money was in the boot for UPS to sign?
      Pretty low rent sales though they keep the line moving.

      Will this lower the residual value of the older passenger models?

  7. With the C series added, and the catch up on the gliders, does Airbus match Boeing output?

    And with all the Airbus A320 assembly lines (6?) why can’t they exceed Boeing with their 3?

    Yea I know, Toilets, but for god sakes, buy a toiler maker and ramp em up!

    • AB has two A32X production plants and two outstations.
      It will be interesting to see where the MoM models get built?

      Treat as A321++ then DE.
      Treat as A310 NG then FR.

    • 8 FAL lines. 2 TLS, 4 XFW, 1 TJN, 1 MOB max capacity ~64/m. Even with the engine issues and swapover to NEO Airbus delivered more NB frames than Boeing.377 CEO + 181 NEO := 558 vs 419 + 74 MAX := 493.

      Where did Randy T draw his numbers of MAX deliveries from? “~~~500MAX in 2017” reported here recently.

      toilets: Throwing manpower at a late project … makes it later 🙂

      • The number/s that have seen for MAX 2017 deliveries is 74.

        With the big backlog in 320NEO’s I wont’t be surprized to see conversions from 320 to 321 depending on passenger growth and/or airline needs?

        An airline could convert 10 A320’s for 8 A321’s for approximately the same seat count.

  8. Surprised how poor the numbers were.

    BA Commercial — 2% increase in deliveries for a 2% reduction in revenue. Consequently not a great year, either selling smaller planes or having to discount more to move the metal.

    Consequently the market is getting tougher or BA is getting weaker. Or they are flogging freighters at money the US Commerce Department might think is dumping if the question was ever asked.

    Looking to the future the B797 can’t come quick enough.
    They are sweating the B787 hard for revenue but they are rapidly eating into an order book that is shrinking — where will they be in 2022 or 2027?

    The former cash cow — 7Double7 is showing some signs of life but it looks like reheated leftovers than a cutting edge platform strikingly forcefully into the future.

    Consequently what will be the BA offering in 2027?
    If the B797 isn’t in revenue service by then the commercial cow will have been well and truly cashed.

    • I don’t know where you are getting your data.

      Boeing had and still does have a large 787 backlog.

      They came very close to 1 to 1 orders and delivering in 2017

      They will secure the large Emirates order this year.

      Probably be at or above close to 1 to 1 again.

      They are ramping up to rate 14 for 787.

      I assume (until proven otherwise) they have a better idea of their orders than we do.

      They may pull shenanigans and short term vs long term on 787 production, have to see.

      I never thought I would see single aisle at 50 a month either.

  9. Wiki standard data.

    2017 COB — 658 orders outstanding.
    2018 plan — 158 builds planned.
    2017 orders — 94 which was a good year / previous 3yr moving average was less than 60.

    BA seem to be in surge mode, Klondiking.
    Collecting the revenue as quick as possible.
    Extra slots might help them sell planes so not all bad.

    Just a case of what happens next?

    • Yep, have to wait and see.

      They over shot with the 777, see what happens with the 787,

      I think rate 8 is realistic long term. On the other hand rate 12 is probably letting it compete when A350 slots can’t be had.

      At the least a hold, but they say they are going to 14.

  10. With the forecast in production of especially narrow bodies by both OEM’s a pool of serviceable used/2nd-hand aircraft must develop.

    Could create opportunities on many fronts.

    • Of a flooded market.

      Particularly in the case of Norwegian, Air Asia, Lion, huge orders they can’t use, turning into leasing operations but don’t have the experience.

      So dog vs dog and low prices and someone or all get hurt.

      • To be honest I can’t see the LCC’s with huge orders take all of them? There are going to be injuries out their for some of these airlines and OEM’s, and opportunities for others to pickup aircraft at bargain prices.

  11. With an NG and MAX backlog of ~4700 it will take 7-8 years to deliver. Brings me to question, is the “797” not a large NSA (220-240 seats) with 18″ seats and wide aisle (MC21-like cabin)?

    • What the 797 if it comes out actually is, fully open.

      All aircraft undergo a change form the original concept to a final form.

      The Sonic Cruiser 787 was a drastic one.

      777 form 3 engines to two was a major change.

      However, I don’t believe Boeing is shooting for a 240 seat aircraft. I think its a notional 220 to 275/300.

      Maybe a short and longer variation with the longer one trading off some range for passengers,.

      • In my part of the world we have a saying; X…z or get of the pot, think that time is approaching for Boeing?

        • Yep.

          Embraer looks not to be the slam dunk they thought it would be.

          Maybe a good thing, they have proven to do well with small aircraft pickup (De Haviland)

          They have the C series hitting them low and a big threat with the A321 there is no real answer for hitting them high .

          Nice position in the middle of the twin aisle lineup, 777x to be seen but I don’t think its going to come close t0 the 777 for sales.

          The slot is pretty well packed with 777-300ER but long term that looked to be a nice segment.

      • @TW

        The concern I have for the NMA is that they are solving a problem that doesn’t exist. True it will work perfectly for a few airlines but with too much scope for the bottom end to be snaffled by the A321/2 and too much at the top end by the A332lite I can see a very expensive investment struggling to make good.

        One of my pet themes is the way in which Boeing seems to have Models with a distinct lack of commonality 737 to 767 to 777 to 787 to 777x where you are hard pushed to see much continuity of development. The same cannot be said of Airbus where the underlying design philosophy can be seen to evolve model by model to a level that you could make an educated guess as to what they will do next. Surely this latter approach is more productive in the long run in bang per R&D buck. The A322 can utilise that approach to raid the parts bins of A330/350/380 as necessary to compete at a fraction of the cost of the NMA. The A330neo replacement in 2028 can come in at a slightly higher seating capacity and range to sit between the B787 and the B797.

        • At one stage I made a comment and did calcs that the NMA/MoM is actually relatively simple if you are clinical. Us the two best aircraft from recent sales, throw them in one pot and see what you get.

          (A321+789)/2. It crudely worked out as (if I remember correctly);

          250 pax,
          5500 Nm range,
          OEW 80T,
          170T MTOW,
          50 Klb engines.

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