Q1 Dreamliner update
Some of Boeing’s key milestones so far this year include beginning major assembly of the 787-10 Dreamliner at Boeing South Carolina and starting final assembly on the 787 program at the 12-per-month rate, according to company executives during the company's recent first-quarter earnings call.
Boeing CFO Greg Smith said the company expects to begin delivery at the 12-per-month rate by midyear.
“On the 787 program, our backlog of about 750 orders remains the foundation behind our planned production rate increases to 12 per month this year and 14 per month later this decade,” Smith said.
Boeing delivered 30 Dreamliners in the first quarter between its Everett, Wash., and North Charleston Dreamliner operations. To date, Boeing has delivered more than 390 Dreamliners, including nearly 100 787-9s. Smith said he expects 787-9 deliveries to “notably exceed” 787-8 delivers in 2016.
Smith said 787 deferred production “was better than planned” and increased $141 million to $28.7 billion in the first quarter, “reflecting the favorable mix towards more 787-9s, as well as continued unit cost reductions.” As production becomes more efficient, the cost to build each Dreamliner goes down.
“This reflects a 30% decline in quarter-over-quarter deferred production growth,” Smith said. “We expect a similar rate of decline in deferred production growth in the second quarter. And for the full year, the deferred production balance should be flat year over year — again, no change to this fundamental milestone.”
“We continue to make progress on the 787 program, including successfully transitioning production of the 787-9, increasing deliveries, reducing production flow times, lowering unit cost and improving overall aircraft reliability,” Smith said. “However, more work ahead of us as we strive to further reduce unit costs and smoothly introduce the 787-10 into the production system, which is on track for later this year.”
Boeing Commercial Airplanes Q1
In the first quarter, Boeing Commercial delivered 176 commercial airplanes overall, down 4.3% from the same period a year ago. Boeing captured 121 net new orders, worth $6 billion, across its commercial jet programs. Backlog remains at more than 5,700 aircraft, or about seven years of production, valued at $424 billion.
First-quarter commercial revenue was $14.4 billion; overall company revenue was $22.6 billion.
“This ongoing market demand, coupled with our sizable and diverse backlog of more than 5,700 airplanes, reinforces our planned production rate increases through the end of this decade as we ramp up annual deliveries to well above 900, and continues to position us for steady revenue, earnings and cash growth in the years ahead,” Boeing Co. CEO Dennis Muilenburg said during the call.
Boeing recently announced plans to eliminate about 4,000 jobs in its Commercial Airplanes division, likely this summer, amid intense competition from Airbus. About 200 Boeing S.C. engineers recently received notification of a voluntary layoff offer. Boeing has not disclosed how many employees it needs to accept the offer, but company officials indicated they did not plan to lay off as many as it gave the offer.
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