The pressure is on Boeing for its 787—and we mean this in a good way.
After years of a program in disarray, Boeing is now delivering new-production aircraft and some of those that have littered the Everett Paine Field taxiways and ramps for the last four years. Boeing has delivered more than two dozen 787s and we don’t think it’s inconceivable that as many as 40 could be delivered by the end of the year, a figure comfortably in excess of prior predictions.
Boeing probably will have an update on its third quarter earnings call October 26.
Although Boeing continues to lose money on every 787 it delivers, and will for many, many years, the pressure is on Boeing to launch the 787-10, a stretched version that nominally will seat about 323 passengers in three classes and have a range of about 6,800nm. This will be a straight-forward stretch, intended to have about the same gross weight as the 787-9 but with far less than the 8,500nm range of the -9.
We would not be surprised if Authority to Offer is announced on the 3Q earnings call, but certainly by November 21, the US Thanksgiving holiday.
Customers have been anxious for Boeing to launch the 787-10. Before the end of the year, we would not be surprised to see upwards of 200 orders (or commitments) announced for the aircraft.
We expect some customers will convert 787-9 orders to 787-10, but scores will be brand new.
The 787-10 represents a shift in Boeing philosophy. When the 787 was launched in December 2003, Boeing pursued a strategy of 8,000nm-8,500nm range, a sexy number that fed into Boeing’s hub-bypass philosophy. The strategy wasn’t universally accepted, however. Many pointed out that few routes required this much range—perhaps 5%-10%–and that building a plane with this capability meant building “too much” airplane.
Lufthansa Airlines in particular adheres to the philosophy that it doesn’t want to buy more range than it needs. The 787-10’s proposed range illustrates this point; this aircraft can serve any route on Lufthansa’s system with anticipated seat mile costs that will be the best in the industry.
At Boeing’s pre-Farnborough Air Show media briefing, company officials acknowledged a shift in the previous long-range strategy. Now, they said, they recognized that 8,500nm isn’t always needed and the -10’s 6,800nm will be plenty to serve most of the world’s inter-Continental and regional routes.
Boeing paid a heavy price for pioneering a composite airplane. It paid a heavy price for out-sourcing major industrial work and failing to keep tabs on its industrial partners and supply chain. It will be years before the program is profitably. Although the 787-8’s early airplanes (through line #90, according to most sources) will be heavy and less desirable aircraft, subsequent -8s will be very good airplanes and the -8 monopolizes new technology in its class. With the 787-9 and the forthcoming -10, Boeing has a winning family of aircraft.