Boeing’s Next Decade Of Product Development Risks & Rewards

  • Eight New Derivatives
  • Boeing Keen To Avoid 787 / 747-8 Overlap Delays
  • Plenty Of Risks Going Forward – But Plenty Of Rewards Too

With three 737MAX variants on the cards as well as three 737MAX-BBJ models, Boeing already has its future hands full.

The company will be keep not to repeat the dual resource drain and subsequent delays that hit the 747-8 and 787-8 families.

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Southwest Airlines’ 737-MAX8 delivery at the tail end of 2017 will likely involve a sigh of relief from Boeing and CFM International – particularly as the engine maker has again committed a big part of its future alongside the 737. And with it, five other variants of the 737MAX family, comprising three business jet variants as well as the 737-MAX7 and 737-MAX9.

Of the firmly announced 737MAX orders, the 737-MAX7 has been rather muted, but based on the relative sales success of the 737-700BBJ, which has amassed some 114 orders since 1993, the prospects of future orders looks promising, but the limelight will fall on it for the wrong reasons if sales lag those of the bigger 737-8 and 737-9. The bigger picture is not isolated to one model. It’s how the entire line-up fares and on balance, with the 737-8 looking to capture about 70% of the future 737MAX backlog (when contrasted to the 737-800 and its backlog share to date vs. total unfilled 737 orders), the real focus is on executing development work alongside a staged production increase of the 737MAX family without delays.

A late 2017 EIS should help Boeing mitigate against that, but there are other projects on the horizon that can impact those goals.

  • 787-10X
  • 777-8X
  • 777-9X

By definition, widebody development is a huge cash and human resource drain until deliveries start.

The three aforementioned widebody jets are instrument for Boeing’s long term product positioning, revenue generation as well as R&D expense – and all at a time when competition with Airbus gives Boeing a second chance advantage over its EU rival.

While no one wants to discuss it, the Airbus A350-900 is heading for at least two more major delays that will set back the airplane beyond Q3 of 2015. The first will come later this year as Airbus finally starts to put together the first parts of MSN1, the first flight test A350-900, whose integration dates have continued to slide rapidly since 2009. The second will come when testing begins. Based on the current A380 woes, Airbus has markedly slowed down development to catch “unknown unknowns” prior to assembly, but that in and of itself is a near impossible ask.

That gives Boeing a huge leg up to push the 787-9, 787-10X, 777-8X and 777-9X into the market space vacated by the ageing and less fuel attractive A330 family and delayed A350-900, and by extension, the delayed A350-1000 (assuming of course it isn’t dropped altogether).

People forget that Airbus has penned the cut-n-shut A350-800 ahead of the stretched A350-1000 for service entry, and unless they nix that model, they have a lot of work to do if they are aiming for the A350-800 EIS date of late 2016.

Putting aside Airbus, Boeing’s plate is full.

There’s no escaping that and neither can anyone discount the stark possibility that the upcoming six models will suffer from the same sorts of production angst that beset the 747-8 and 787-8. Boeing says it has learned from its past mistakes and in some ways went to hedge against it with the investment in South Carolina. But that won’t be enough. Adding the 787-10X will further inflate costs and pressurise the supply chain, particularly when Boeing is many years off from breaking even on the 787.

The 777 too, while both in a monopoly and featuring as the star of Boeing’s ‘ka-ching!‘ coffer noises can ill-afford new variants that end up being drastically altered like the 747-8 family and then lose its time and performance advantage.

But if there is one aspect that will favour Boeing’s eight-model push – it is this.

Historically, Boeing derivate airplanes have not just entered service on time, it is that they have often exceeded expectations. The 777X has the best chance of execution success given the maturity of the supply base as well as the ability instigate change thanks largely to the airplane being the last all new Boeing airplane that did not have production risks on the scale of those seen on the 787.

The 737 family too, will fare well, not just because of past execution, but also because of CFM International’s consistent and persistent ability to develop, test, produce, certify and deliver engines for the 737 that no other competitor could ever dream of.

The questions about the customised LEAP-1B core, furore over fan sizes and the like are nonsensical. It would be irresponsible of Boeing not to explore ways to increase efficiency and reliability. Case in point, the Boeing Advanced Technology Wingtip developed especially for the 737MAX. There will be a lot of disappointed critics when the LEAP-1B flies, that much is already evident.

The 787-10X will be paced more by where it is built than anything else. The 787 production system is maturing with each passing day and the omens look good for reaching 5 airplanes per month before the year is out. The stretched fuselage of the 787-10X is too big to fit in the current 747-400LCF Dreamlifter and there’s no reason why Boeing South Carolina could not and should not build it. Everett no longer is first choice.

Digesting those development programs will require money – while insatiable demand for efficiency and greater redundancy in the market is driving orders, the revenue streams from the Next Generation 737 and 777 has to stretch beyond high gross profit margins and also cater for human capital investment. If there is one thing Boeing lacked during the delays of the 747-8 and 787-8, it was manpower.

That will be the critical element which dictates just how well or poorly the next six Boeing airplanes do on program execution. The orders will always be there for the taking, that much is assured, but those are not worth having if the cost of delays kills margins.

Image Courtesy Of Boeing

2 Replies to “Boeing’s Next Decade Of Product Development Risks & Rewards”

  1. The 747-8 family will also continue to be invested in through performance improvement packages (aerodynamic tweaks, engine enhancements, operating empty weight reductions, gross weight increases and flight-management computer enhancements).

  2. JL claimed that the A350-1000 is 25% more fuel efficient by seat than B77-300ER.
    This claim can be check as follows,
    Plane: B777-300ER A350-1000
    MTOW: 775000 679000
    MZFW: 524000 485000
    OEW: 370000 ???
    MSP: 154000 ???
    3-Class: @210#/P 77700 (370) 73500 (350)
    Fuel: #/gal MAX. 320863 (47890) 276114 (41211)
    Design Range: nm 8000 8400

    Based on 25% by seat = (350/370)*320863*0.75 = 227639.
    This equal 82.4% of its maximum fuel @ design range. Consequentially,
    OEW = 679000 – (73500 + 227639) = 377861 or MSP = 107,139#.
    This makes no sense. Instead of by seat, by total fuel volume or 320863*0.75 = 240,647 or OEW = 679000 – (73500 + 240647) = 364853 or MSP = 120,147#. This makes no sense either.
    What If it was fuel limited as the 300ER is? them,
    OEW = 679000 – (73500 + 276114) = 349614 or MSP = 135386#.
    This is more reasonable. If true, then it is 14% (41211/47890) more fuel efficient by total than 300ER.
    It is not physical possible to be 25% by any criteria.

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