Boeing To Lose 787 Customer
Michael Mecham mecham@aviationweek.com
As Boeing put a $2.5 billion price tag on the cost of last year's machinist strike and predicted it will make more deliveries in 2009 than sales, it announced the first substantial order loss for its high-flying 787 airplane program.
Chairman and CEO James McNerney said one customer with 15 orders will drop off Boeing's list Thursday, leaving 58 customers and 895 firm orders. The customer, which could be any of five airlines fitting the description, will remain unidentified until it makes itself known.
While the current backlog "is holding," McNerney said during a 2008 earnings report today, "we do expect to see an increase in the number of deferrals and cancellation levels in 2009." But the big crunch from a weakening airline environment is more likely to be seen in 2010 because its 2009 customers largely have their financing in place and are ordering new airplanes despite reducing capacity by retiring older aircraft, said Chief Financial Officer James Bell.
McNerney declined to forecast this year's order rate, saying only that it will be below par on a book-to-build basis, referring to the number of aircraft produced compared with orders written.
The 2009 forecast is for production of 480-485 airplanes, about what Boeing expected to achieve last year before a machinists' strike dropped 105 deliveries off the list. Boeing ended the year with just 375 deliveries, 15% fewer than the 441 it delivered in 2007.
Production is expected to increase substantially in 2010 largely because deliveries are to begin for the long-delayed 787 and the 747-8. By how much the production totals will jump, however, Boeing isn't saying.
Boeing Co., which forecast 4,500 layoffs at Boeing Commercial Airplanes last December, widened the pain Wednesday by saying an additional 5,500 workers will be laid off this year. Those cuts are to come in various services and support units, as well as Boeing Integrated Defense Systems, it's second biggest business unit.
As of Dec. 31, Boeing had a total of 162,191 workers, of which 69,917 were at IDS and 67,659 were at BCA.
Pink slips are to be spread over the year, McNerney said, but the majority are to be by the end of June.
Despite having to pump up research and development costs by $500 million in 2009, mainly to cover 787 and 747-8 design and production issues, Bell said R&D will fall back in line by 2010. "This is the year that we will get through the major R&D expenditures," he said.
Total Boeing R&D for 2009 is forecast at $3.6-$3.8 billion.
McNerney said, "We are feeling comfortable on the timing" of the first two flight test aircraft for the 787 to be ready to meet the revised schedule for first flight in the second quarter. He expects all six flight test articles to be flying within four months of the first flight. That is a key target if Boeing wants to keep on a condensed nine-month flight test program in order to begin making deliveries in the first quarter of 2010.
Although much smaller, the 747-8 program has turned into a big headache. It was short-changed in engineers when staff was shifted to the 787 and then hit design problems with its super-critical wing. The 747-8 is the third generation of the iconic widebody and, thus far, has appealed mainly to freight customers. Of its 98 orders, 78 are for freighters and only 20 are for passenger aircraft, all placed by a single customer, Lufthansa. The rest are specialty Boeing Business jet orders.
Despite that, McNerney said Boeing won't abandon the airplane.
"We still believe the 747-8 is a very competitive airplane with a strong market nitch," he says. It is generally regarded as a competitor to the much larger Airbus A380, although Boeing says it is properly positioned between the A380 and the 777-300ER.
Photo: Boeing
