Boeing CEO Dennis Muilenburg announced Wednesday that the 787 Dreamliner production rate will jump from 12 jets per month now to 14 per month in 2019. He also gave upbeat reports on Boeing’s other major commercial-airplane programs.
Boeing will raise the 787 Dreamliner production rate from 12 jets per month now to 14 per month starting in 2019, chairman and CEO Dennis Muilenburg said Wednesday.
With 787 production evenly split between Everett and North Charleston, S.C., that likely means seven planes per month rolling out at each assembly site, up from six a month today.
“We’re very confident we can do that while keeping long-term supply and demand in balance and a healthy production system,” Muilenburg said at a Morgan Stanley industrial conference in Laguna Niguel, California.
The news comes as a much-needed boost for the widebody-jet plant in Everett because production of the larger 777 jet there has fallen sharply.
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The output of 777s has dropped from 8.3 aircraft per month a year ago to five per month today, and will sink soon to 3.5 per month as Boeing slows the line to introduce assembly of the first 777X flight-test planes.
Muilenburg also said Boeing has decided that 787 order prospects are sufficiently healthy that it can spread the deferred cost of the program over 1,400 planes, up from the current assumption of 1,300.
That accounting change is another boost for the program, since Wall Street analysts had begun to be concerned that the massive amount of deferred costs still to be recouped — almost $30 billion as of the end of June — might trigger a large write-off.
By stretching the costs over an additional 100 aircraft, Boeing pushes out that possibility for now.
Muilenburg said new 787 sales campaigns are active for deliveries early into the next decade.
“The airplane is performing so well in the field today, it’s clearly adding value for our customers,” he said.
On Tuesday, the prime minister of Malaysia announced a memorandum of agreement with Boeing to buy 10 787-9s.
However, Wall Street analyst Ken Herbert, of Canaccord Genuity, wrote in a note to clients Wednesday that the increase in the production rate seems more driven by Boeing’s push for higher cash flow, helping make up for the reduced cash coming in from 777 deliveries, rather than market demand for the 787.
“We are skeptical that (Boeing) will be able to maintain a 14/month rate on the 787 for an extended period of time,” Herbert wrote.
Good news too on 777 and 737
Muilenburg also gave upbeat reports on Boeing’s other major commercial-airplane programs.
He said a new order for six current-model 777s was finalized in the last week and will be announced by the customer within days.
That helps bridge the order gap between the current 777s and the forthcoming 777X, which begins deliveries in 2020.
Muilenburg said Boeing is now more than sold out for its planned 777 deliveries next year, and 90 percent sold out for 2019.
“Our confidence continues to grow on filling out the bridge, sustaining the current production rate and then moving briskly into 777X,” he said.
Switching to production of the 737 in Renton, Muilenburg said Boeing successfully ramped up last quarter from 42 jets per month to 47 per month while also delivering the first of the new model 737 MAX aircraft.
Although Renton initially had a separate, dedicated production line for the MAX, with two more assembly lines rolling out the current 737 model, it has now successfully integrated production so that MAXs and current model 737s are rolling down the same line, he said.
“That is going very smoothly,” Muilenburg said. “We expect MAXs to be about 10 percent to 15 percent of the 737 deliveries this year.”
He added that not only is Boeing on track to raise 737 production further — the plan is to go to 52 jets per month next year and then 57 per month in 2019 — but that “ all of the market signals are saying we could go higher … all of the market pressures are upward.”
As for Boeing’s proposed next new airplane, the so-called Middle of the Market airplane that some have dubbed the 797, Muilenburg reiterated that no decision has yet been made to go forward with that project.
He said he anticipates a decision “over the next year or so.”