Airbus’ new engine option (NEO) for the A320 family is not having an impact on Boeing’s customer base for the rival 737 and is not influencing the company’s decision on whether to build a successor or re-engine the existing airframe, says Boeing Chairman, President and CEO James McNerney.
The company remains on schedule to deliver 20-40 787s and 747-8s this year after the first 747-8 Freighter is sent to Cargolux in mid-year (probably July) and 787 to All Nippon Airways in August.
Boeing has set a production target of 485-500 airplanes in 2011, far higher than its 2010 total of 462. The rampup reflects not only greater anticipated productivity on the 747 and 787 assembly lines but also continued increases in 737 and 777 output.
In the next three years, total factory output will be up 40% from current levels, McNerney said. Even factoring in that number reflects previously anticipated production rates of 10 aircraft per month from 787 assembly lines in Everett, Wash., and North Charleston, S.C., the jump is a “stunning” number, says Frost & Sullivan analyst Wayne Picker.
In a teleconference Wednesday on first quarter results, McNerney would not comment on when Boeing can expect the 787 line to be profitable, given the cost overruns associated with falling more than three years behind schedule. But he foresees “significant opportunities to increase the profitability” in later production.
“We are looking at a new model or two as alternatives from where we are now,” he said. He did not provide details, saying those models will be discussed later.
Boeing has already discussed a 787-10 stretch of the 250- to 290-seat, long-range 787-9 that already is planned. The -9 is a stretch version of the basic 210- to 250-seat 787-8.
There was to be a shorter-range, higher capacity 787-3, but it attracted little interest. Thus far, Boeing has not discussed a freighter version although it always has introduced a freighter in its widebody offerings. McNerney’s comments were the first to suggest multiple variants to come.
“NEO has not to date had a significant impact on our customer base,” he said of the 300 commitments Airbus has recorded. Instead, the re-engine project is “closing the [technology] gap [Airbus] has with us,” he asserted.
As senior Boeing executives have said for more than a year, McNerney reiterated that the company’s customers prefer to wait for an all-new airplane rather than a re-engined 737.“My view is that we’re not going to lose customers for three-to-four years with a significantly new airplane versus a re-engine” program, he said. The time reference is to the NEO’s service entry in 2015 and the anticipated 2019/2020 service entry for a 737 replacement.
He added that NEO has done “a good job of fending off the Canadians in the Airbus customer base,” a reference to Bombardier’s CSeries single-aisle challenger.
If it builds a new single aisle, Boeing “will address the heart of the market first,” referring to products seating 145-185 seats. “We haven’t sorted it out totally, [but] in all likelihood that is where we will start,” McNerney said. After that, the new product line could shift into a 757-size replacement of slightly more than 200 seats to give competition to the Airbus A321.
Meanwhile, Boeing is seeing progress on the 787 and 747-8 development programs that both are expected to be in hand by the time it has to begin work on either a successor to the 737 or a re-engining program. The timeline for a new airplane remains 2019-2020, as the company has maintained for months.
However, Boeing is sticking with its earlier statements that no new airplane versus re-engining decision will be made until late this year.
Boeing’s final assembly line in the 40-26 bay in Everett, Wash., now has the 36th through 39th production line numbers under production. Parts for the 40th aircraft are arriving. In total, 29 aircraft have rolled out of the factory.
The company is using its 40-24 bay as a rework center to refurbish aircraft with design changes that have flowed out of its flight test program. That same building is also being refurbished to become the 787 surge line.
Meanwhile, the program has towed five 787s to nearby hangars at Paine Field owned by Aviation Technical Services for similar change incorporation or customer-specific work. One out of an anticipated six 787s have been flown to Boeing’s San Antonio, Texas, factory for rework.
Boeing reported first quarter revenues of $14.9 billion, down 2% from a year earlier, with earnings from operations of $1 billion off 15%. But net income rose 13% to 586 million and earnings per share were $0.78 a share, slightly off the $0.80 Wall Street was projecting.
The declines were attributed to the continued investment in bringing the 747-8 and 787 programs through development and flight test to initial deliveries.
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