Boeing executives said Tuesday that delays in airline orders for 787 Dreamliners from American and United airlines stemmed from matching aircraft with their needs, not any disappointment with the innovative aircraft.
“Nothing about our fundamental view of the market has changed,” Jim McNerney, Boeing’s CEO, said during an investor day conference. “Airlines are increasingly profitable,” and are investing in new aircraft, he said.
Ray Conner, CEO of Boeing Commercial Airplanes, said American delayed delivery of five 787s in April so it could adjust its mix of planes after the merger with US Airways.
American just started flying the 787 between Dallas and Chicago last week and plans to shift the jets to international routes in June. As for the five Dreamliners American asked to delay, they will now arrive in 2017 and 2018 instead of next year.
Meanwhile, United scrapped an order for 10 Dreamliners in favor of the same number of 777-300ER aircraft, which became more attractive with lower fuel costs. United was the first U.S. carrier to fly the 787 and airline executives still like the plane. But Conner said the 777s will replace the airline’s aging 747s.
The result will allow Boeing to get 777s to United faster while also moving up other customers in line to get the popular 787.
“All in all, every one of those moves was a fantastic, win-win solution, which we always are trying to do with our customers on these things,” Conner said.
Overall, Boeing has a backlog of 5,715 plane orders. Executives described a careful approach to boosting production, but said they could speed up deliveries of 737 MAX and 787 aircraft through the end of the decade.
“We think we’re very careful with our rate increases,” McNerney said.
Greg Smith, Boeing’s chief financial officer, said 787 production will grow from 10 per month now to 12 per month next year and to 14 per month by the end of the decade.
The 737 will increase 12% to 47 per month next year and to 52 per month in 2018, Smith said.
“These production rate increases are supported by the strong demand for our commercial airplanes, where a number of our key programs are sold out in the 2020 time period and beyond,” Smith said. “This backlog continues to provide a great foundation for us to deliver to our customers and our shareholders.”
Conner said efficiencies in producing the planes increases the company’s profitability. The 787-8 was only 70% similar to the longer 787-9, he said. But the transition is easier to the 787-10, which is 95% similar to the 787-9, he said.
For the 737, Boeing is moving to build 52 per month — and could go higher — in the same footprint that it used to build 21 per month, Conner said.
“That’s a huge statement in terms of efficiency,” he said. “You create a lot of flexibility to respond to the market.”