In the wake of Boeing’s decision to push back initial 787 deliveries to mid-first quarter next year, my erudite colleague Howard Wheeldon shares his thoughts on the delays.
Although hugely disappointing news that delivery of the first Boeing 787 ‘Dreamliner’ airplane to launch customer All Nippon has now been delayed into the first quarter of 2011 will come as little surprise to long time programme followers. In fact at the Farnborough Air Show just last month Boeing was clearly hedging bets over when the first delivery would be made, a factor that surely translated to the old adage ‘a nod is as good as a wink’. Officially the latest delay is apparently being reasoned by what is called a contained engine turbine failure on a Trent 1000 engine at Rolls-Royce’s huge Derby, England based test facility. This not only resulted in complete engine failure but also seriously damaged the test equipment facility. Moreover because my understanding is that the specific engine that blew is needed for the final aspects of the flight test programme it would appear that Trent engine failure has scuppered any chance of the 787 achieving full certification in time for All Nippon to receive a first plane this year.
ZA003 seen at last months Farnborough Air Show
Image copyright/owned by FleetBuzz Editorial.com
Other than confirmation of the turbine blade failure and the damage done to test equipment at Derby there has been little additional comment from Boeing or Rolls-Royce as to why the specific problem might have occurred. During testing and because the engine is likely to be put through maximum stress I doubt that this is the first time a turbine blade has failed although having seen the facility in full use it is my understanding that rarely does a failure cause the amount of damage that we imagine occurred on this particular occasion. Nevertheless, even though as a result of the blade failure it is probably that some modification will be required to the Trent 1000’s already on the 787 test certification programme (with ZA006 this should soon be six airplanes) and although clearly a set back to the programme we do not see the additional Rolls-Royce engineering that is likely required being a major obstacle for the 787 programme once the test facility is fully back in action. Indeed, even had the Rolls-Royce engine problem not occurred we had severe doubts that All Nippon Airways would actually have received its first airplane before the early part of 2011.
Although most observers had built in the probability of one further delay ahead of the first customer airplane delivery markets will quite naturally take a dim view that Boeing has been forced yet again to announce a problem on the 787 programme. Meanwhile All Nippon Airways is we understand ‘champing at the bit’ to get hold of its first airplane so that flight crews can begin to accrue the hours necessary to allow for full ETOPS operation. However we do not expect that they will make a great fuss over one further delay and neither do we expect another for All Nippon ahead of the first delivery being made mid way through the first quarter of next year. However it is true that problems do still remain in the overall production programme such as quality problems with the Alenia manufactured horizontal stabilizer not to mention the aft and central sections of the plane that the Italian engineering company produces. Indeed, quality problems from far too many of the international production partners in the 787 programme have provided a major obstacle to progress of the 787 programme over the past three years. Leaving the Rolls-Royce problem aside as a likely one-off, Alenia is thus only the latest in a very long line of supply chain problems and the further emphasises the possibility that this may be yet another aspect in the 787 supply chain (see enclosed list) that Boeing may need to bring back in house.
Since quality issues and the ability of the international partners to deliver components in sufficient numbers to match the intended production programme schedule first surfaced near three years ago Boeing has been quick to take the problems back in house. To that end the Chicago based company acquired Global Aeronautica and Vought Aircraft Industries and as we have intimated above, we suspect there may yet be other acquisitions of 787 based component suppliers over the next year.
Whilst we are not particularly fazed by the specific delay problem that Boeing announced today we are concerned at the prospect that not all problems within the supply chain may yet have been resolved. Without doubt the 787 airplane is an absolutely massive programme by any standards imaginable and there would always bound to be problems to resolve on an airplane that after all is so very different in engineering and production terms from anything that has ever been built before. For all that we continue to view the 787 is an absolutely brilliant airplane and one that will serve the Boeing company and its shareholders very well over the next two or three decades – just as the 737 family has consistently done ever since 1970. But from a profitability point of view there is still a very long way to go yet in the 787 programme.
Meanwhile All Nippon Airways will without doubt get its first 787 airplane during the first quarter of next year in my view and I am in very little doubt that Boeing will quickly get through the remaining certification process requirements. But the bigger question to me remains that with around 850 of the truly fantastic 787 aircraft on order from customers worldwide will the company manage to meet the already much delayed delivery schedule? Right now that question is very difficult for me or anyone else to answer. Sadly, as Pat Shanahan who runs Boeing Commercial production was forced to admit not very long ago, “the 787 has tarnished [Boeing’s] reputation”. Few can argue that and yet most rightly regard Boeing as a very well run company that will in the end get it right. Neither is anyone about to admit that going about the 787 production as an international partnership such as the one that was originally envisaged was with the benefit of hindsight the right way to progress. Indeed, most would probably say that they would like to see a lot more of the component supply production being brought back in house.
To be absolutely fair about this though and accepting that not only have errors been made by all concerned and that even Boeing bit off a little more than it could chew the vast majority of the foreign production partners have been absolutely brilliant. These include Toray Industries, Mitsubishi, Fuji and Kawasaki in Japan, very many US and European based companies such as GKN, Rockwell Collins, Honeywell, Hamilton, Goodrich and GE to name but a few. Most of these have performed very well and it is a point that sometimes is not sufficiently stressed. Indeed, fair to say that despite the unfortunate problem that reasoned the specific announcement from Boeing last night so too has Rolls-Royce performed brilliantly through the 787 programme. The problem though and it is one that must be quickly resolved is that some including Alenia have certainly not performed well and as long as they leave room for doubt markets will probably refuse to embrace the fantastic programme and opportunity that the 787 truly is.
Howard Wheeldon – Senior Strategist, BGC Partners
