Boeing today gave an update for the 737 MAX program. Keith Leverkuhn, VP of Program Manager, provided the briefing. Michael Teal, chief project engineer, was also on the call. The highlights, paraphrased:
KL:: We’ve had firm systems definition, firm design definition.
MT: We see airplane having an 8% operating cost per seat over competition.
KL: With the recent audit numbers coming in and the 14% fuel efficiency, and continuing to make progress and pulling delivery date from 4Q to 3Q 2017, the MAX just keeps getting better.
Q&A
The decision where to site the Boeing 777X Final Assembly Line–Everett (WA), where the current 777 is built, or Charleston (SC), where Boeing is rapidly acquiring land and shifting work from Washington–will boil down to tactical or strategic considerations, says the chairman of a suppliers trade group.
It’s 50/50 whether Washington will be selected, says J. C. Hall, chairman of the Pacific Northwest Aerospace Alliance. PNAA represents small- to medium suppliers in the Pacific Northwest, with concentration in Puget Sound around the Boeing plants in Everett and Renton.
We spoke with Hall today, with plans to post the interview tomorrow. But today The Wall Street Journal posted a story about this topic, so we’re advancing the posting. Jon Ostrower wrote:
Boeing is now evaluating using the South Carolina plant for both final assembly of the 777X and to build the jet’s new carbon-fiber composite wings, according to two industry officials briefed on Boeing’s development of the 777X. “South Carolina looks more and more promising.”
And:
The South Carolina plant has had some hitches. Boeing initially planned to be building three 787s a month by the end of this year, but the new site wasn’t prepared to make that jump and the company now expects to build two to three 787s a month there by year-end. The Everett plant will build eight 787 a month by year’s end, relying further on its twin assembly lines. Boeing announced Wednesday it would accelerate total 787 production to 12 a month in 2016 and 14 a month before the end of the decade.
We’ve previously written that our market intelligence tells us Boeing Commercial Airplanes wants to build the 777X in Everett but that Boeing Chicago (i.e, headquarters) seems to favor Charleston.
[youtube=http://www.youtube.com/watch?v=RJ5MotPlUu4&w=420&h=315]
Alaska Airlines is the latest carrier to order the Aviation Partners Boeing Scimitar split winglets. Here is the press release. United Airlines was the launch customer for the Scimitar.
Alaska Airlines image.
The Scimitar provides additional fuel burn savings over the blended winglet, also created by APB. The blended winglet has been retrofitted to most Boeing 737NGs, some Classics and some Boeing 757s and 767-300ERs.
Boeing has adopted a split winglet for the 737 MAX, but of its own design, which is similar in look to the APB Scimitar. APB’s cost for the Scimitar is a list price of $545,000 for the 737-800-3, a designation for the Scimitary-equipped 737-800.
Range increase in nominal over the blended winglet, according to APB.
Here are APB’s charts showing the advantage of the Scimitar over the blended winglets:
737-800-3
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737-900ER
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With the launch of the Boeing 777X expected to be approved this month by the Boeing Board of Directors, followed by the public launch at the Dubai Air Show next month, the future sales of the in-production 777 will be closely watched by the industry as well as by Boeing itself.
It is conventional wisdom that sales will fall off as entry-into-service nears for the 777-9X, said to be “late this decade” by Boeing but more likely 2020 or even 2021, according to customers.
Sales of the Airbus A320ceo and Boeing 737NG families have, so far, held up surprisingly well despite the launch in 2010 of the A320neo and in 2011 of the 737 MAX families. Most of the neo and MAX orders have been combined with the current generation aircraft. This has been viewed as a way to keep the production lines full in advance of the EIS of the new airplanes.
Further, Airbus and Boeing plan an overlap of production of the two generations of about two years. This contrasts with Boeing’s decision to cease production of the 737-300/400/500 concurrent with the launch of production of the 737NG, a move Boeing today says was an arbitrary choice.
Boeing plans to begin building the MAX on a third line in its primary Renton (WA) factory before phasing out the NG. Airbus hasn’t specified how it plans to integrate the production of the ceo and neo.
What will happen for the current Airbus A330 and Boeing 777 lines as the A350 and 777X come on line?
A380 Strategy: Airbus may rethink the near-term strategy of the A380, with an eye toward reducing production rates, reports Reuters. Earlier this week, Boeing announced a rate reduction for the 747-8. Very Large Aircraft (VLA) continue to be a tough sell. YTD, Airbus has net orders of minus three for its VLA, although a Memorandum of Understanding for 20 was signed at the Paris Air Show and is expected to be firmed up by year end and possibly at the Dubai Air Show next month.
Still, the VLA market is very tough. Boeing sold five 747-8s this year and had cancellations of five. Airbus hasn’t met its annual sales target for the A380 for a couple of years.
787-9 Video: In a change of pace, enjoy this video that is nothing but a relaxing visual.
[youtube=http://www.youtube.com/watch?v=eUZmTzPyR-A&w=560&h=315]
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Boeing B-29: Here’s a sight not seen much anymore: take off and landing of a B-29. As interesting as this is, the weather and the photography is pretty cool, too.
[youtube=http://www.youtube.com/watch?v=3-r8p97vPt0&w=560&h=315]
Boeing announced today that the accounting block for the 787 program has been increased by 200 to 1,300.
Introduction of the 787-10, boosting the production rate from 10 to 12 to 14 between now and the end of the decade, and production investment to increase efficiency are among the reasons. The accounting block is the break even in accounting terms, though the program on a cash basis will be positive much sooner.
Update, Oct. 24: We received this message from Boeing:
The program accounting quantity (or block) simply represents the number of airplanes for which we can reasonably estimate revenue and cost as we look ahead. It is not a breakeven number ( it wasn’t for 1,100 and isn’t for 1,300).
The profitability calculation is derived from the accounting quantity, not the other way around. As we line up more sales and have visibility of future costs for any airplane program, the block for that airplane will be extended and the margins adjust– it is not related to concepts of ‘breakeven.’ And the program is profitable, so it follows that the accounting quantity can’t be ‘the breakeven number’ .
Continuing original post:
Here are the highlights from the third quarter/9 months Boeing earnings call:
Jim McNerney, CEO: JM
Greg Smith, CFO: GS
JM: Strong passenger demand means fewer deferrals, requests for acceleration of deliveries. Cargo market remains soft but the fuel efficient 747-8 remains well positioned when the market recovers.
GS: Commercial airplane business increased 15% in third quarter.
JM: With three strong quarters behind us, we remain committed to goals. Priorities: profitably ramp-up on commercial programs, execution, strengthen and reposition defense business with more international expansion, and providing value to shareholders and customers.
Q&A: