2010: Testing Times For Boeing
First Flights Mark A Year Of Tests Toward Certification
Production Ramp Up Will Be Key To Financial Success, Stability
As Boeing gets ever closer to first flight for the 787 Dreamliner and 747-8F, the challenge during next year won’t just be the certification efforts.
Planned increases in production on the 767 and 747 were held back, along with a cut to the 777 line, commencing next summer - Boeing’s focus on flight tests and initial deliveries will then turn to solidifying the supply chain, particularly that of the 787, and look to increase production as quickly (and painlessly) as is possible.
Revenues during 2010 will be under pressure.
While the 777 has thus managed to survive deferrals en masse, until a wider industry rebound occurs, the decrease in production means that the 787 will become the focal point for money spinning. Thus far, the 787 has escaped falling into the forward-loss position that the 747-8 family finds itself in, despite the recent shot-in-the-arm order from Korean Air, but the litmus test of the 787 will be not only to be produced in meaningful numbers, but to be delivered against a backdrop of a consolidated supply chain.
Image courtesy of Boeing
Criticism of the distributed work share statement on the 787 may have forced Boeing’s hand in reacting to making the purchase of Vought’s share in the supply chain, however, the fact remains that just as Airbus is experiencing woes on the A380 production line, the goal of getting towards making thirteen 787’s-a-month by 2013 or later will be an onerous task - not least because Boeing needs to eat into the backlog and get airplanes into its customers hands.
The supply chain consisting of the three key Japanese “heavy” partners will be integral to this.
If Boeing does look within the next 5-10 years at supplanting the 777 with an all new design, the chances of the wings being made in Japan look promising.
At present, the Japanese heavies are physically restricted in their operational capability and will need working capital to expand - not just to cope with the anticipated 787 ramp up as well as the second line in North Charleston, SC, but they’ll also want to verifiably demonstrate that they have what it takes to produce a new 777 replacement wing (and components) too.
The 747-8 family may have an easier ride by all accounts. The question is resources. And future sales.
Image courtesy of Newairplane.com
Despite the A380 not having a freighter variant, the 747-8F is still likely to languish in terms of new orders until such time cargo yields and traffic reverse the losses seen this year. That’s unlikely to happen with the next 12 or even 18 months.
By the same token, the 777F makes a compelling argument for freight operators instead of 747-8F, but that’s a good problem to have when your rival doesn’t offer anything in comparison today. (Or tomorrow, in fact).
The 747-8I has the saving grace that those existing 747-400 operators are not buying A380’s in large numbers, if at all. Given the loss on that program, all of the hard work garnered by years of 747-400 sales and profitability, it seems ironic that the first major stretched variants of the iconic jumbo have swung into negative territory.
As Mo Yahyavi mentioned to me, he’s ready and able to increase production - it’s just a matter of timing.
You can argue that ensuring 787 production is on track will rank more importantly than flight testing, particularly when Boeing has a plentiful supply of experience when it comes certification efforts.
Without deliveries, there’s no revenue - significant inventory build up, cost overruns, late design changes and untold sums of compensation payments have to be covered before the 787’s sales success over the last five years translates into financial success.
When that happens, it’s only a matter of time before the 777 needs to be addressed - and it’ll be a whole different ballgame to the one Boeing played with the 787.
33 comments December 10th, 2009
