After The Delay
From research notes to blog talk, east to west, south to north - the delay in the 787’s first flight drew out an array of thoughts on the matter.
While the delay in itself is rather untimely given that assurances were made that the first example would fly by the end of the second quarter, the pressure to commit to a second production line plays heavily on the decision to incorporate a permanent structural fix to the upper wing root area that didn’t handle stresses as per the modelling.
The chorus of words demanding management change overlook the fact that any new seniority still faces the same technical issues as before. Of course, the concern after the conference call last week was the omission of any new timetable. That could be interpreted as perhaps maybe a revision in a minor way so as not to stretch out flight testing beyond the second quarter of next year, or indeed a complete detailed schedule cannot be provided until testing on the structural area yields some quantitative results.
For the 787, its two key stumbling blocks thus far have been the incorporation of radical new technology, never before used on such a wide-ranging single family application and secondly the distribution of the work amongst partners dotted across the globe.
ANA Boeing 787-8
Image courtesy of All Nippon Airways / Boeing
Customers such as Qantas that have now vacated some of their slots presents an opportunity for other customers waiting farther down the 787 delivery chain to possibly negotiate earlier deliveries. For launch customer All Nippon Airways, traffic in Japan and the region has been hit hard, exemplified by its national rival, Japan Airlines, having to seek out a hefty bail out loan while it restructures.
Where Boeing will want to forget this week as it races to start the next one - questions surrounding the ability of its international supplier partners being able to incorporate this new patch to the 787 and aim to increase production with minimal revenue in the short term will create added pressure - particularly since the 787 distribution chain as well as production have yet to reach a level of “normalcy”.
Critically, these vacated 787 slots will be much sought after and could for the time being, mean Boeing does not have to put too much thought into a second line anytime soon. The balance ultimately lies in whether the supply partners can ramp up production to meet the goals of the Everett final assembly line or whether they risk parting with capital to yet further raise component manufacture for a second line when the first is not even close to being maximised.
With service entry almost inevitably now delayed yet further, aside from being able to build and deliver 787’s faster with a second line, the issue of revenue surges with importance. Until an updated schedule emerges, it’s impossible to speculate on what, if any number of 787’s can be delivered next year. Boeing’s cash position will take a hit with yet further compensation costs and perhaps a second line can alleviate the longer term production issue of delivery of the backlog. The costs of doing so are huge and we may yet see Vought being taken out of the 787 equation altogether, albeit the costs of not doing so are even greater. Add in to the mix other product development studies, and you quickly get to a situation where such decisions will be made sooner, not later.
Laughably, a few proletarians suggest that there’ll be some “imminent demise” of Boeing without considering it doesn’t just sell the 787 when it comes to money. A few other one-dimensionalists, in a show of blinkered inappropriateness, appear fixated on “credibility”, thereby undermining what little of their own they (might) still have despite their limited outlook. Yet by the same token, such critics embrace disbursement from EU taxpayers and still fail to condemn EADS for its antics in seeking aid for the A350XWB program - that on top of the untold sums that are still being ploughed into the A380.
“It’s a matter for the politicians,” said Airbus’ John Leahy at the recent Paris Air Show.
Well, actually its not.
If EADS didn’t need to ask for aid while warming an ~8bn Euro nest egg for “US acquisitions” that will likely never materialise, the politicians have nothing to discuss!
That aside - Airbus stands to gain very little from Boeing’s woes. With its own A330 order book bulging and the A350XWB block-booked until 2016, many carriers with orders for those types as well as the 787 will have to endure a waiting game - not least because yields and traffic are still searching for the seabed before they can even consider rising to the surface.
In the mish-mash of surface-depth doom mongers, the industry downturn may just be the saving grace for the 787 despite its delays as customers seek to reshuffle their businesses and their fleet procurements.
Every coin has two sides - it’s not all bad news.
39 comments June 29th, 2009
