Aeroflot Russian Airlines has formally canceled its Boeing 787 order, further casting the future of Boeing’s Dreamliner program into uncertainty.
Boeing ramped up production of the Dreamliner earlier this year from 12 to 14 aircraft per month at two facilities (for a total of 28 planes per month). Without new orders, Boeing may be forced to cut production by 2022.
One insider, speaking to Reuters on the condition of anonymity, said that Boeing has dozens of unsold 787s scheduled for production in 2022. The precise number of slots is closely guarded and numbers can flucuate based upon an airlines’ decision to accept promised deliveries.
With Boeing still seeking a solution for its 737MAX program, the lull in demand and latest cancelled order for its 787 program paint an uncertain picture for the Seattle planemaker.
As far back as 2015, Aeroflot said it no longer needed any 787s (it opted for Airbus A350s instead), but the orders have remained on the books for the last four years. The cancellation was worth $5.5BN at list price, though analysts estimated Aeroflot had negotiated a 50% discount over retail pricing. Its order included 18 787-8s and 4 787-9s.
As noted by the Seattle Times:
Boeing now has a total order book of 1,450 Dreamliners through September, with 894 of those delivered. The 556 still to be delivered, split roughly 50:50 between the two production sites in Everett and in North Charleston, S.C., leave 40 months of work at the 14 jets per month rate.
That leaves Boeing on the hunt for new orders with a newfound sense of urgency.
CONCLUSION
Boeing is experiencing a difficult period. With lingering 737MAX issues, widespread cracking on its 737NG (Next Generation) models, a lull in 747 and 777 orders, and now a potential slowdown in 787 production, Boeing is scrambling to plug many holes at once.
image: Jetstar Airways / Wikimedia Commons
Yet it’s stock has held up very well. The fed is adding a drip to a dying patient and drawing out the end painfully. Every one is in paralysis. Cant buy, can’t sell. Not low enough or high enough.
It has held up well. Boeing is lucky to have freighter production lines in addition to commercial. The 787 is still popular and the 777x is in dominant position. They have their military contracts with multiple plane lines, helicopters (with partners), missiles and their space contracts. All in all they are doing fine. Whether they are going to grow profit wise and stock wise after being up 200% in 5 years, idk.
What’s the penalty for Aeroflot to just kill off an order like this without swapping to another Boeing model?
Confidential, though my thought was that some clause was triggered that allowed them to cancel -or- they were hoping for that and Boeing ended up sticking to the schedule.
You know, Boeing kicked Seattle to the curb years ago, moved half its production to (non-union) South Carolina, moved it’s corporate HQ to Chicago, and accelerated its outsourcing of components to foreign manufacturers. Boeing has waved goodbye to Seattle with its middle finger in many ways, and continues to do so. Given all of that, I don’t think it’s appropriate to keep calling Boeing “the Seattle planemaker.” They’re based in Chicago now and have been for ages.
Fair enough.
As of February 2019 employees by location on Boeing website:
Alabama 3,049
Arizona 4,336
California 12,869
Missouri 14,566
Oklahoma 3,158
Pennsylvania 4,580
South Carolina 7,343
Texas 3,860
Washington 69,830
Other Locations 29,436
Total Company 153,027
I wish Boeing abandoned Seattle and gave jobs only to red states but that is very far from the truth. Washington State is still a huge part of the company,
Art Fern There are inaccuracies in your account of things. First, only the corporate headquarters moved. Production of both commercial and military products remained where it had been. Second, the production that moved to Charleston is only one variant of the 787, the -10, and Boeing had experienced a lot of pain in producing planes in Charleston. Given that the vast majority of Boeing aircraft are still produced in the Seattle area, and the Commercial HQ is still located in Seattle, it’s entirely appropriate to call Boeing a Seattle plane maker. That said, I believe they are blowing at least part of that opportunity with dropping quality. The composite wings on the new 777 model are still unproven, and ROI had not been realized on any of the newer lines they have produced in recent years.
556 aircraft at two facilities = 278 aircraft per facility.
278 aircraft to be produced at a rate of 14 aircraft a month = 20 months per facility.
Even more urgent (the article suggests 40 months).
no, 14 aircraft a month is both facilities combined total. Not 26 per month which would be unheard of for a wide-body production rate anywhere including Airbus.
and yes, the original article is also incorrect saying
“12 to 14 aircraft per month at two facilities (for a total of 28 planes per month)”
When Boeing quotes production rate, they don’t do per facility. it’s always per airplane program.
hint: I provide IT support for 787 production line.
Thanks; clears up the 40-month / 20-month “discrepancy”.
No wonder. Quality standards are low in the US manufacturing plants. Several airlines have complained.
US turned to be china now? Wow….
Anybody know what Airbuses market share trend has been since Boeing’s 737 debacle? I try to buy American (I know I’m probably naive with everything sourced nowadays from everywhere) but IMO, they deserve to be severely punished for how this has gone down.