Boeing 787 news

[sn26567]

After China Eastern, maybe China Southern:

China Southern May Scrap 787 Orders as Delivery Delayed

Oct. 18 (Bloomberg) -- China Southern Airlines Co., Asia’s largest carrier by passenger numbers, said it may join China Eastern Airlines Corp. in scrapping orders for Boeing Co. 787 planes after delivery of its first plane was delayed until July.

[RoMax]

If China Southern is about to cancel orders for the 787 (while they will be the first users in China, will get their first halfway 2012 and they need it for their network development as fast as possible) you can be 99% sure this is a political decision. All the orders of Chinese airlines that are (partly) owned by the government are coordinated by the government. If China Eastern, their daughter Shanghai Airlines and China Southern cancel their orders in such a short period there is more behind it than 'just' the delays. Especially for China Southern as they get their first one in July 2012, it will be impossible for them to find an alternative (at least if they want something new) wich will be delivered faster.
I have the idea China Southern is just threatening to cancel to get more compensation from Boeing. Not really suprising after Qatar/Cargolux perfectly showed how to get General Electric and Boeing on their knees, while they already had an agreement before.
The Chinese at least want to be better, don't you think? (I say this because you can still expect a lot from China, and China Southern is far from a full private airline)

[sn26567]

LOT Polish Airlines was the first European airline scheduled to get the Boeing 787.

LOT is now expecting another delivery delay of its first Boeing 787. The first delivery, most recently rescheduled for spring 2012, has been pushed back to 2013, more than five years behind the original schedule.

LOT is blaming the delay in delivering the 787 for the stagnation of its long-haul traffic. Indeed, LOT did not open new destinations in expectation of the new aircraft it had ordered.

[earthman]

So can someone explain what is going on with all the new delays??

[RoMax]

So can someone explain what is going on with all the new delays??

Just as with the A380, delays in production. The ramp up of the production is going slower than planned, the aircraft that are now comming of the FAL still need quite some rework.
But this was already known by the affected airlines by some time, but of course they do not communicate with the world directly after they hear this from Boeing. They first look at the consequences for them and at the possible things they can do.

[sn26567]

The first delivery to LOT, most recently rescheduled for spring 2012, has been pushed back to 2013, more than five years behind the original schedule.

A LOT Polish Airlines spokesman said that the carrier expects its first Boeing 787 delivery to be in 2012, not 2013, as reported by Polish Press Agency PAP earlier this week.

LOT placed its first order for seven 787s in 2005, and increased the order to eight in 2007. Deliveries were originally slated to begin in 2008.

[earthman]

Yes I remember reading somewhere that LOT expects a half year delay on the first delivery.

But they are used to such delays, the new terminal building at WAW also had a 5 year delay (on a 2 year original build schedule...).

[sn26567]

More 787 delays ahead for Boeing

New York-based Bernstein Research said Boeing will not reach its target for a 787 production rate of 10 a month until 2015. In a client report issued Monday, Bernstein said it had lowered its 787 outlook “due to our concerns of additional program delays.”

Bernstein said in the report, “As a result, we have taken 787 deliveries down to six aircraft this year (from eight), and 51 in 2012 (from 61) and shifted these to the 2013-2014 time horizons.”

More in ATW online

[earthman]

If this were a Japanese company we would see crying CEOs and public seppuku.

[RoMax]

The delays are building and building. Already years of delays in development and testing and even more delays will come as the production ramp up goes slower than expected. This is not going to end soon...

Anyway, for the 748F. RC574, also known as G-GSSD, wich will be the first 748F for Atlas Air but will be leased to BA and is in full BA worldcargo livery, is supposed to be delivered on 28 October and will fly home on 30 October. This is not confirmed, but several sources say this and at the moment everything is going to plan to get this one delivered on 28 October.
First delivery to Cathay seems to be delayed a bit, but should also happen between now and let's say 10 November.

Furthermore, tomorrow will be an interesting day. As tomorrow Boeing will present an earnings report and the thing about that is wanted the most is the accounting block for the 787.
Boeing may peg this benchmark for 787 profit to an output of 1 100 aircraft. This means that all the costs Boeing made will be spread over the first 1 100 787's, after these 1100 first aircraft Boeing can start to make money on their 787's. Specialist reports talk about 900 up to 1200 787's.

http://www.bloomberg.com/news/2011-10-25/boeing-may-peg-benchmark-for-787-profitability-to-output-of-1-100-jets.html

If this wasn't clear already, this is a lot. Luckelly Boeing is strong enough to sustain such a programme, thanks to the succesfull 777 and 737 production lines wich are both running at record production rates.
As Boeing said it themself: "We had not done a development programme in 15 years, since the 777. We paid a very heavy price for that". Boeing invested billions in the research and development of new technologies, production technics, ... and due to several set backs the costs increased enormously. The only thing that you can see as an advantage now is that Boeing can use the technology they developed for the 748 and the 787 can be used in future programms like the 737MAX and the 777-8X and -9X. As a result the development costs of these aircraft will be much lower, also because these are not new designs but improvements.

[RoMax]

Oh, and I almost forgot something else.

Tomorrow will not be only important for the fincial world, but it will be once again a very important day for the 787 programm.

ANA will operate it's first commercial flight with the 787 tomorrow from Tokyo Narita to Hong Kong!! The first sheduled commercial flights will start on 1 November (if I remember well).

From dream to reality Altough this may only count for the passengers and not really for the airlines (altough eventually this will be a dream of an airplane for them also) and for Boeing itself we can better say "From dream to nightmare"

[Treeper]

here's a little video from http://www.deredactie.be about the first commercial flight from ANA.

http://www.deredactie.be/permalink/1.1141101

[RoMax]

Due to financial reasons Air India will probably cancel 15 of the 27 787's they have on order. After an extensive audit the board of AI decided that they only need 12 787's. Accepting the full order of 27 aircraft could be a disaster for the financials of the airline.

[RoMax]

Boeing indeed set the initial accounting block for the 787 on 1100 deliveries. This is a historical high number and means that it will take Boeing more than a decade (as from now) to be profitable on the 787.

Furthermore Boeing has lowered it's number of expected deliveries of 787's and 748's for this year. They now plan 15-20 deliveries for the 748 and 787 combined. The previous number was 25-30 and before July 2011 it was even 25-40.
At this moment there are 4 delivered; 2 787's for ANA and 2 748F's for Cargolux. Another 748F is about to follow on Friday (first delivery to Atlas Air/BA Cargo), altough that is still not officially confirmed.

[RoMax]

Boeing gave some updates on the 787 production:

Boeing is going to initiate the 2.5/month production rate with LN50 this week. Currently on the FAL are LN44 (position 4), LN47 (position 3), LN48 (position 2) and LN49 (position 1). These are build at a rate of 2/month, LN50 will be the first one to be build at a rate of 2.5/month.

Boeing also said the supply chain is preparing for a further increase in production in the comming months. When this will happen and what the new rate will be is not sure yet.

And very important news. As from LN60, Boeing will produce 787's that will not need any incorporation or re-work. So this will be within about 4 months or faster (depending on the production rate increase).

The above is confirmed by Boeing. But what is also said (but not confirmed by Boeing) is that ANA will get 7 787's before the end of this year (including the two already delivered), but that no other airline will get their first 787 this year. The certification of the GE powered 787's seems to be delayed and because of that it will be almost impossible to deliver a GE powered 787 this year (unless at the end of December, but as Boeing shuts down for the holidays shortly before Christmas, this is quite unlikely). But almost all 787's that are now of FAL are powered by GE engines... exept for ANA and LAN. But I don't think the LAN 787's are already ready for a 2011 delivery and if I'm correct LAN already said a long time ago that they will get their first one in 2012.

So for 2011 normally only ANA 787's. But after the holidays (Boeing restarts in early January) and the GE 787 certification, I'm quite sure we'll see quite some deliveries to airlines like LAN, JAL, AI, RAM, Ethiopian, China Southern, ... in 2012.

[RoMax]

Just saw LAN confirmed they will take delivery of their first 5 787's in 2012. But this number is down from seven wich was planned before. LAN also said they expect 8 in 2013 and 12 in 2014.

[DeltaWiskey]

Boeing indeed set the initial accounting block for the 787 on 1100 deliveries. This is a historical high number and means that it will take Boeing more than a decade (as from now) to be profitable on the 787.

An accounting block is well, an accounting block. It does not mean B/E is at 1100 frames. Boeing expects to sell (and deliver) at least 1100 frames over which they can spread the already spent costs. It does not mean they have to sell 1100 before making a profit on the program.

[RoMax]

An accounting block is well, an accounting block. It does not mean B/E is at 1100 frames. Boeing expects to sell (and deliver) at least 1100 frames over which they can spread the already spent costs. It does not mean they have to sell 1100 before making a profit on the program.

Yes indeed, spreading the costs over the first 1100 aircraft...so basicly 1100 deliveries is supposed to be the break-even quantity. They have to sell 1100 787's to cover all the costs they made. As long as they do not deliver 1100 aircraft, they can not make profit on this program on it's own (this doesn't mean the costs can't be covered). With previous programs (777, 767, 757, 747 and 737NG) this was always at 400.
Boeing even said that the deliveries from now until at least 2015 will lose money, before the revenue can start to pay off the initial made investments.
It's almost impossible to break even on a program before the accounting block expectations are achieved. The 787 is not going to make any profit (as a program) before they deliver 1100 frames.

[DeltaWiskey]

MR_Boeing: You still doesn't seem to understand it, B/E is NOT at 1100. B/E is rather lower, something around 800-900, we will probably never know how much "exactly".
The accounting block is set larger than the actual B/E, so that Boeing can project the program cost over a larger timeframe. That way their anual/quarterly results are less affected, and the results are more stable (= happier shareholders).

For the 737NG it WAS indeed at 400, however Boeing changed it to 800. (they also had a 100% cost overrun on that program)

An accounting block is purely for the purpose of the accountancy, it doesn't represent actual B/E.

[RoMax]

The accounting block is the estimation of Boeing in wich they can absorb all the costs they made. Boeing is never starting with a number wich is much higher than the actuall B/E. Saying they will break even at 800-900 frames is not right. Even 1100 is an optimistic number as this means Boeing has to reduce production costs in the comming years 50-60% faster than they did with the 777.
Planning too much frames in the accounting block reduces the profit margins (as the costs are still spread over all the frames, while the costs could have been covered earlier) at the end while this would not be needed anymore. An accounting block wich is very big is not something to be happy about as a shareholder either, especially when it shows to be too big in the end, what results in lower profits with the latest frames of the accounting block. This is not something to be happy about for an shareholder as they'll get less money.
Of course an accounting block wich is too small is not good either, but better than an accounting block wich is way too big. Boeing will never plan a overestimation of 200-300 frames. If their accounting block is for 1100 frames they will break even at 1100, slightly lower, or higher. If they start making profit at 800-900 frames they would do an EXTREMELY good job, but I doubt it.