Boeing Trims This Year's Delivery Forecast on 787 Snags

 - October 26, 2011, 1:50 PM
Boeing won't likely deliver more than seven Dreamliners this year due to continuing "re-work" of early units. (Photo: Gregory Polek)

Boeing once again lowered its forecast for deliveries of the 787 and 747-8 this year, to between 15 and 20 aircraft, after previously projecting an output of between 25 and 30 units. The 747-8F will account for roughly two thirds of those deliveries, said Boeing, meaning that it won’t ship more than seven 787s this year. It has so far delivered two 787s to Japan’s All Nippon Airways.

As a result, Boeing’s total delivery projection for the year stands at 480 airplanes, compared with an estimate of between 485 and 495 released with its second-quarter earnings figures. The downward projections come as Boeing continues to grapple with what CEO Jim McNerney called a “rework” of early 787s during a conference call held on October 26 to discuss the company’s third-quarter financials.

“We’re just methodically going through the rework that was driven by flight-test discoveries and other engineering changes that we needed to get through,” said McNerney. “It’s just a matter of walking through it…[there is] no real change to the configuration of the airplane…so it’s simply a matter of timing I would say.”

Nevertheless, McNerney confirmed that the company last week would complete a production rate increase from two airplanes a month to 2.5. “Elements of the supply chain are already moving toward subsequent rate breaks,” he added.

Notwithstanding the downward adjustment for this year, McNerney re-emphasized his belief that Boeing will reach a production rate for the 787 at 10 a month by the end of 2013, at which time, according to CFO James Bell, the company would start to approach a positive profit margin on each airplane it builds. “A lot of good things happen when you get there,” said Bell.

Boeing also for the first time formally established a so-called initial accounting quantity for the 787 program at 1,100 units, meaning it would calculate the profitability of the program based on the delivery of that many airplanes. It did not, however, project precisely when the program would break even. “Remember, the actual setting of accounting quantity is different than establishing profitability,” said Bell. “The profitability will ultimately fall out of it, but they’re two different things.”