Boeing 787 Update

The 787 media briefing is now over.

Since news of the airplane being rescheduled back in October, a change in management has taken place and all ears were firmly fixed on Patrick Shanahan.

Image courtesy of Boeing / HeraldNet

Speculation has been rife that there would be a mix of both good and bad news. Overall, the mood was upbeat and unlike former 787 general manager Mike Bair, Patrick seemed to stamp a voice of authority across the entire program.

Evidence of this can bee seen further below of the changes he has implemented since taking up the new role. During the conference call itself and throughout the media questioning, Pat was very assertive and gave forthright answers where required.

Let’s press on with the lowdown.

Image courtesy of Boeing

Below is a (lengthy) summary of the hour long conference call.

Data has also been kindly supplied by NYC777 (member at FleetBuzz.com)

Scott Carson (SC) - Executive Vice President, The Boeing Company - President and Chief Executive Officer, Commercial Airplanes

• Unprecedented market demand for the 787 – right airplane for the market
• Set a new high for sales. 787 orders for 2007 stand at 314 so far and there may be more before the end of 2007 - 762 firm orders from 52 customers in total
• Global business model unqualified - high confidence in 787 technology
• New plan unchanged
• Risks remain
• First flight targeted at the end of first quarter of 2008, delivery in late Nov, early Dec 2008 - 109 deliveries by end of 2009
• Customers remain priority
• Can’t let 787 issues bleed across to other airplanes
• 747-8F on track for ‘09 delivery/EIS
• Mike Bair’s comments neither “pleasing or displeasing”

Patrick Shanahan (PS) - Vice President/General Manager, 787 Program, Boeing Commercial Airplanes

• Shanahan conducted thorough review of the entire 787 program starting in October and met with 787 global partners
• 787-8 design complete 100% - no flaws in design
• Design and development phases were executed well and now need to execute production ramp up & assist Vought, direct line of sight on work
• Focus on assembly and quality
• Robust production program
• Retired combined aircraft development and design team (formerly led by Scott Strode)
• Reorganized the department:
  • Development,
  • Supplier Management
  • Final Assembly & Operations
• Daily meetings on the factory floor to ensure that the right processes are followed and that required changes are implemented to reduce risk exposure
• Starting the same process with the partners (meetings with them)
• Reviewed and agreed to certification requirements of the 787 program with the FAA now need to demonstrate compliance with the requirements
• 80% component tests complete, 25% certification deliverables tested
• Successfully tested the horizontal stabilizer in Italy – results “as we expected”
• Airplane #1 is 91% first flight qualified
• Ongoing weight reduction program
• Parts shortages down, installation up
• Complete Airplane #1 and focused on power on by end of January 2008. Able to retire risk at power on. Perform integration testing and then perform gauntlet testing. Everything is on track to support power on
• Honeywell FCS on track - 92 out of 92 systems ready
• Honeywell FCS - “Functionality overwhelmed”
• ZY997 – move to static fixture in January. Frame is mostly complete
• Parts are much more complete
• Fasteners and parts are arriving at a faster pace
• Production schedule will be more predictable once power-on is achieved
• Flight-control tests will occur after power-on
• Flight control software is ready for power-on
• ZY998 – started final assembly, forward with main fuselage and wings are attached. Rear fuselage will be moved later this week
• Airplane 2 parts will arrive later this month to start final assembly
• Airplanes 2 through 6 commences Jan 08. Airplane 7 (first customer airplane) will be out the door by end of March 08
• Both engines families (RR and GE) will be ready for testing by start of flight test program (4 RR powered, 2 GE powered)
• No flaws in the production system process
• Confidence to meet production goals - right investment in tooling/automation, lean processes
• Alenia starting work on Airplane 14 with partners starting work on Airplane 7
• Traveled work is starting to decrease- continues to be the biggest constraint to progress on program
• Big problems are solved but the small details are the frustrating part
• No more fuselage join problems (as briefly seen on Airplane 1)
• Non conformance issues “normal & simple”
• Investment in automation and processes (more efficiencies) will allow production rate of 6 airplanes per month
• Hardware and software that is going to be used in flight test are being used in the engineering simulator. Software is coming together very well
• The documentation problem still exists but Shanahan has his “arms around it” and the situation is improving – eyeball to eyeball contact with partners
• Spirit Aero in “really good shape” – wiring being installed on Airplane #2
• 37 request boards trimmed down to 1
• “Flushing out risks” via demonstrative performance – both Boeing and 787 partners
• No line number for when 787’s arrive fully “pre-stuffed”
• Flight test program will detail effects of weight and possible improvements destined for the 787-9. SC mentions flutter clearances as being critical for FAA compliance

Joseph F. Campbell, analyst at Lehman Brothers throws in some welcomed good news on Boeing’s earnings. He forecasts strong EPS growth from 2008 through to 2010 and says that the stock price can be supported entirely by earnings

“Boeing’s existing base of business includes rising earnings from higher deliveries of legacy products, falling 787 research and development, lower pension expense, and a large share repurchase program.”

Image courtesy of Boeing

Doubts still remain as to whether the production goal of 109 airplanes by the end of 2009 can still be achieved. Boeing is likely to have a more hands on approach to the chink in the 787 armor that is Vought.

While no one is ruling out the outside possibility of work being brought “in-house”, this would fly in stark contrast to the divestitures Boeing has made over recent years - coupled with yesterdays news that the company is increasing its dividend, the reality is that Boeing is not going to backtrack.

More critically, it was evident from Shanahan’s comments that the hands on approach to both partners, their work and work being undertaken by Boeing itself is under his watchful eye - rather than lay the blame game at peoples doors, Shanahan is impressing the culture that operational goals must be met via a supplier management regime that shares his vision.

From manufacture to final assembly, the emphasis on quality was rarely off Shanahan’s lips- the real goal after today’s briefing will be to see whether the 787 partners can raise their game and meet the challenges of not just ensuring the first model takes to the air, but whether their production systems facilitate the necessary ramp up to reach that goal of 109 787’s by the end of 2009.

Airbus too, is moving ahead with the delayed A350 and announced that the landing gear would be developed and supplied by Messier-Dowty.

Yesterday, the European plane maker also released its latest order figures ending November 30th 2007.

Click here for the latest data. Boeing has net orders total of 1,144 whereas Airbus’ net total stands at 1,095. Its gross figure widely reported in the press is 1,204 - surpassing its own 2005 best of 1,055 airplanes ordered.

Only last week Scott Carson stated that the orders race would be won by its European rival.

Regardless of who attains that mantle, both companies have enjoyed widespread success across their product portfolio’s, with the A320 and 737 families underscoring the unprecedented demand airlines still have for these jets.

The end tally this time next year however, will likely tell a much different outcome.

The following twelve months will be more interesting than the last three years…

17 comments December 11th, 2007