Wednesday, December 17, 2014

Boeing delivers first 787 to Avianca....finally

Update from my earlier post.   Avianca has finally taken possession of its first 787 yesterday.  The aircraft ZA665 (LN 217, N780AV) was reported at the Everett Delivery Center by sources. This indicates that the aircraft is due to depart from Everett soon.

This aircraft had a very long gestation period at Everett spending over 6 months from the start of final assembly to delivery at Everett.  It is suspected that there were seat issues but also financing issues that held up delivery.  Avianca is expected to take three more 787s before the end of the month.

Seats and Financing - hold ups to 787 deliveries in December

Boeing's aggressive 787 delivery schedule is being threatened by two issues: availability of BFE (buyer furnished equipment) namely the premium seats from Zodiac but more importantly the ability of certain airlines to fund the final payment to Boeing upon delivery.  Most of the aircraft's purchase price is paid upon delivery.  The seat issue has already shifted several deliveries into January.

For some carriers with less than stellar cashflow, obtaining the financing to fund this final payment has been tough.  In particular Avianca and Azerbaijan Airlines have had aircraft that are all set to deliver yet are still sitting on the flightlines at Everett and North Charleston.  The delivery dates have been repeatedly moved to the right and there hasn't been any further test flights nor any need for further test flights unless the delays take much longer at which point Boeing would have to fly a FCF (functional check flight) to make sure that the aircraft and it's systems still all check out.

Avianca has 4 787s on the flightline with 3 ready to be delivered.  Azerbaijan has both 787s that they ordered ready to be delivered as well.  The delays have been driven by the customers and not Boeing yet represents 6 aircraft that could be added to their year end and month end revenue totals.  Boeing is trying to keep the delivery schedule for these 6 airplanes in December and it does appear that they have time especially since the issues doesn't appear to be technical.

Monday, December 15, 2014

787 December Mid Month Report

It's already December 15th and thus far I can confirm that Boeing has delivered 5 787s thus far but I am waiting on confirmation on 3 additional deliveries to Avianca (2) and Azerbaijan Airlines (1) that are scheduled to be completed by the end of today.  With the 5 deliveries in December (thus far), Boeing has delivered 101 787s in 2014 and need 9 more to achieve their guidance of 110 deliveries.  They do have plenty of aircraft that appear to be ready to be handed over to customer as additional customer flights have taken place over the last few days.

the delayed deliveries of many of these aircraft have been attributable to different reasons including:

Delay seat deliveries from seat vendors (i.e. Zodiac) or delays in certifying the seats for installations Avianca, Etihad, American Air).  Bloomberg has an excellent article on the delays attributable to Zodiac

Financing issues (Azerbaijan Airlines).

Despite the trouble with deliveries, Boeing has still being going full tilt on production and my season adjusted calculations show that Boeing will start work on 8 787s in December while rolling out 9 from final assembly.

Lastly, the plane spotters in Abu Dhabi will get a special treat as Etihad's 1st 787-9 ZB077 (LN 229, A6-BLA) will fly to the country today, December 15th for a marketing trip.  It'll be there until the 18th and then fly back to Everett.  This aircraft still has not been delivered and has yet to take a customer flight though I don't know if the flight to Abu Dhabi wold count as a customer flight.  Boeing is still aiming to deliver this aircraft to Etihad on Dec. 31st.

787 Full Production Table

Tuesday, December 9, 2014

Boeing falls short on November 787 deliveries, off to a slow start in December

Last month Boeing delivered an anemic number of 787s despite the growing backlog of aircraft at both Everett and North Charleston.  By the end of November, Boeing had delivered 96 787s for 2014 and needs to deliver a further 14 aircraft by the end of December in order to meet their goal of 110 787 deliveries for the year. The delays have pushed aircraft that were to be delivered in November to December yet almost 1/3 of the way through December Boeing has delivered only 1 787. 
According to the latest information (which changes more often than I can keep track), Boeing is looking to deliver 18 more 787s this month in addition to the 1 that has already been delivered to Air New Zealand.  I do believe that this number will eventually be trimmed down to 14 if not fewer.  Several aircraft have not had their B-1 flight as of yet despite having delivery dates later this month.  Several might also be pushed in January due to issues with customer supplied interiors and financing among other issues.  Other sources of delays maybe driven by weather conditions (B-1 flights have weather restrictions placed on them for safety sake) as well as the upcoming Holidays.  Boeing had delivered 15 787s in June of this year so it is entirely possible for them to crank out this number and I do think they can deliver 110 for the year but they do need to pick up the pace.  There are several 787s that were scheduled for delivery in December but those aircraft have already slipped into January, among them the first 787s for American Airlines and Scoot.
Among the candidates that expect deliveries this month are:
Aeromexico - 1
Air India - 1
ANA - 1
Avianca - 4 (787s that were delayed for yet unknown reasons but suspected to be interior furnishings)
Azerbaijan Airlines - 2 (rumored to have financing issues to complete the purchase, any one have any spare nickels and dimes to lend to them?)
Etihad - 1 (rumored to be delivered in January)
Japan Airlines - 2
Korean Air - 1 (terrible teen aircraft LN 11 for VIP transport but still needs to do a B-1)
Royal Air Maroc - 1 (still need to fly a B-1)
Thai - 1
TUI Travel (Arke) - 1
United Airlines - 1 (last 787-8 for UA)
Virgin Atlantic Airways - 1 (787-9, still needs to do a B-1)

A full year end review will be written up soon after the New Year followed by a 2015 Look Ahead.

Monday, November 24, 2014

Boeing announces the start of final assembly of 1st Charleston built 787-9

First Charleston Built 787-9 for United Airlines.  Boeing Photo
Boeing announced the start of final assembly on the first 787-9 to be built at their North Charleston facility and which will ultimately be delivered to United Airlines in about 3 months time.  The aircraft, ZB170 (LN270, N35953) was loaded into position 1A on November 23rd according to my sources.

Boeing is aggressively expanding its footprint in the North Charleston area and plans to build all three version of the 787 at the plant.

Here is Boeing's press release on the start of final assembly of ZB170.

Boeing South Carolina Begins Final Assembly of its First 787-9 Dreamliner

North Charleston site joins Everett, Wash., team in building newest 787

NORTH CHARLESTON, S.C., Nov. 24, 2014 /PRNewswire/ -- Boeing (NYSE: BA) has started final assembly of the 787-9 Dreamliner at its South Carolina facility. The team began joining large fuselage sections of the newest 787 Nov. 22 on schedule, a proud milestone for the South Carolina team and another sign of stability for the program.  
The North Charleston, S.C., site joins Boeing's Everett, Wash., final assembly, which began 787-9 production in May 2013. United Airlines will take delivery of the first South Carolina-built 787-9. 
"Our team is well prepared and eager to assemble the 787-9 Dreamliner," said Jack Jones, vice president and general manager of Boeing South Carolina. "Achieving this significant milestone in our final assembly operations demonstrates that we're performing well here at Boeing South Carolina. We're looking forward to delivering our first South Carolina-built 787-9 to United Airlines, and delivering 787-9s as well as 787-8s to all our customers." 
The 787-9 complements and extends the 787 family, offering airlines the ability to grow routes opened with the 787-8. With the fuselage stretched by 20 feet (6 meters), the 787-9 can fly up to 40 more passengers an additional 450 nautical miles (830 kilometers) with the same exceptional environmental performance – 20 percent less fuel use and 20 percent fewer emissions than the airplanes it replaces. The 787-9 leverages the visionary design of the 787-8, offering passenger-pleasing features such as large, dimmable windows, large stow bins, modern LED lighting, higher humidity, a lower cabin altitude, cleaner air and a smoother ride.

Thursday, November 20, 2014

Charleston to start building 787-9

Since Boeing's 787 plant in North Charleston opened in 2011 it has exclusively built the 787-8.  This Sunday (Nov. 23rd) that will change when ZB170 (LN 269, N35953) is loaded into position 1A at the North Charleston plant to start the final assembly process.  The aircraft is destined for United Airlines and should be delivered sometime in March.

This is a huge milestone as the future of the 787 seems to be tied to the 787-9 and, to certain extent, the 787-10.  As the production rate increases in North Charleston there should be more 787-9s being built in North Charleston but for the first year or so most of the 787s that are built in Boeing North Charleston will be the 787-8.  In 2015 I expect the lion share of 787-9 that are delivered will be built in Everett.

Delta goes with Airbus for widebody order spurning Boeing

Leeham Co. analyst Scott Hamilton broke the news last night that Delta Airlines has decided to go with Airbus' offer of the A350-900 and A330-900 aircraft essentially rejecting Boeing's offer of the 787.  The rumor, right now, is that Airbus offered favorable delivery slots in 2017 while Boeing's delivery book for that year is completely sold out.

Interestingly Delta had inherited Northwest Airlines' 787 order when they merged in 2009.  At that point the Delta had the early delivery slots for the 787s yet over time they had elected to move those delivery slots further out to the right to around 2020 and beyond.  If they had kept those delivery slots for the 2017-2018 time frame, Delta could have had the 787-9 and at a very competitive price as well.  One has to question Delta's fleet management decisions in context of the Airbus order while still holding a 787 order with early delivery slots.

Now that they have gone with Airbus the 787 order is in limbo and, in my opinion, order that will never be delivered even though it will remain on the Boeing order book just like Virgin Atlantic's A380 order with Airbus.

Saturday, November 15, 2014

Boeing looks to deliver fewer than 10 787s in November

With November more than half over Boeing has recorded only 1 delivery of a 787 this month but more troubling is the continuous shifting of the delivery schedule to the right setting up what may be a very un-happy holiday season for the Boeing workers who would have to put in overtime to get these aircraft completed, tested and delivered.

Boeing can deliver 8 more aircraft this month but one of them, a 787-9 for Air New Zealand, hasn't had its first flight yet and is tentatively scheduled to be delivered around Nov. 24th.  It appears that this aircraft may fall into the December delivery time frame thus I see Boeing only delivering only a total of 8 787s this month.

Notably there are 4 787s for Avianca all of who are ready for delivery or are close to being ready for delivery but these deliveries are now not scheduled to start until December due to some unspecified issue.  Rumor has it that the 1st class seats are not FAA certified though I doubt that as all the customer supplied options such as seats come from the Boeing catalog which are FAA certified.

Also many of the 787s have yet to take their first customer flights and that schedule is also slipping to the right.

This can leave a large number of 787s hanging around Everett (not so much Charleston due to the low production output) as the Holidays come up.  This can serve to continue to increase Boeing's deferred production costs well past the $25.2bn mark as Boeing will have to pay a tremendous amount of over time to catch up in December.  If Boeing only delivers 8 total 787s in November, their YTD total would be 98 and 12 short of their goal of 110.  It is certainly possible for them to deliver 12 787s in one month; they demonstrated they can deliver a significant number of 787s in 1 month but it will come at a cost.

Additionally, they have undertaken very few B-1 flights for aircraft that are due to be delivered in December and there a re still a number of 787s that are at the EMC or on the 40-51 ramp that are finishing up traveled work.

All the while production continues at the 10/month pace though with continued traveled work issues.  Thus far they've rolled out 4 787s with a 5th due to roll out on Sunday night and they've started final assembly on 5 other air frames.  Clearly the backlog in increasing so much that Boeing will be sending 787s to Charleston for final delivery as the ramp space at Everett is shrinking.

It is plainly obvious that Boeing production issues on the 787 are far from over and I do think the only way for them to be resolved is to through more resources and money now before the issues continue to snowball.

We'll see for December brings but right now I  think it's safe to say that Boeing 787 deliveries for this month will be terrible at best.

787 Full Production Table

Monday, October 27, 2014

Boeing Delivers 200th 787

Boeing officially delivered the 200th 787 today to Qatar Airways.  The delivery was made at Everett where the aircraft was assembled and tested.  This aircraft is the 16th delivered to Qatar Airways and is the 86th Dreamliner delivered this year and the 7 delivered this month.  Boeing delivered the 100th 787 on Nov. 4th, 2013 to Japan Airlines so it too just under one year to deliver the 200th 787.  Qatar is expected to fly the aircraft away by tomorrow to Victorville, Ca.

If Boeing is able to maintain 10 deliveries per month then we should see the 300th 787 delivered around early to mid August 2015.

787 Full Production Table