Story ID: BCBoeinginvestorconference05122015
Boeing Confident About Commercial Airplane Outlook
By: Bill Carey
Caption: Recent 787 order changes are 'normal fleet planning adjustments' that do not presage a cyclical change, CEO Jim McNerney says.
Word Count: 530
Boeing executives delivered a bullish outlook during the manufacturer’s annual investor conference on May 12 in Chicago, citing a record backlog, historically low rate of cancellations and deferrals and anticipated future growth. They downplayed recent changes in 787 Dreamliner orders.

Opening the conference, chairman and CEO Jim McNerney said that demand remains solid for commercial airplanes, and that recent actions by United and American airlines to trade or defer 787 Dreamliner orders represent “totally normal fleet planning adjustments” and do not presage a change in cycle. “Nothing about our fundamental view of the market has changed,” McNerney said. “Demand for our new airplanes remains high…Airlines are increasingly profitable, [and] therefore more likely to have the resources they need to buy new technology.”

Ray Conner, Boeing Commercial Airplanes president and CEO, also addressed American Airlines’ decision to defer delivery of five Dreamliners to 2017-2018 and United’s request to trade ten 787 orders for 777-300ERs. “Those were really driven by fleet optimization, and, specifically, adjusting the American delivery stream was more about matching what their requirements were in their fleet,” now that the carrier has merged with US Airways, Conner said. “United kind of upgaging to the 777-300ER [was] more about” replacing existing 747-400s, he added.

Boeing has delivered 43 Dreamliners this year and 271 overall to 33 customers “The 787 production system continues to grow healthier and more stable as we’ve moved along,” Conner said. “We’re seeing it translate now into continued progress in key operational performance indicators such as unit cost.”

The 787 assembly lines in Everett, Wash., and North Charleston, S.C., combined are producing 10 Dreamliners a month, including an increasing number of stretched 787-9s. Boeing plans to retire a temporary surge line in Everett by year-end, which helps toward the transition to the new 777X, Conner noted. The manufacturer plans to increase Dreamliner production to 12 airplanes a month next year, after which it will introduce the 787-10, and to 14 by the end of the decade.

There are currently 142 orders from seven customers for the 787-10, the longest variant seating up to 330 passengers. The 787-10 is designed for 95-percent commonality with the 280-passenger 787-9, Conner said. “The -8 to the -9 was a very significant change," he advised. "That caused a lot of disruption into our production system as we transitioned -8s and -9s going down the production line. The disruption associated with bringing the -10 in will be quite minimal as we move forward.”

Boeing plans five production rate increases over the remainder of the decade for its 737 and 767 airliners. It will ramp up production of single-aisle 737s in Renton, Wash., to 47 per month in 2017 and 52 per month in 2018. Production of 767s will increase to two per month next year.

Boeing Commercial Airplanes has a backlog of 5,700 airplanes valued at $440 billion. Boeing Defense & Space, which is building the 737-derivative P-8 Poseidon for the U.S., Indian and Australian militaries, the 767-derivative KC-46A tanker for the U.S. Air Force, and the new Air Force One 747-8 that will carry the U.S. president, has a backlog of $62 billion.