Gleeful Boeing hands first 787 to Japan's ANA
Boeing Co
Around 500 Seattle workers flanked the gleaming, carbon-composite aircraft as it was slowly towed toward its Japanese buyers at a podium outside the planemaker's mammoth Everett, Washington, production plant.
It's very exciting; I hope to ride on it someday, said Jeffrey Goulet, a manufacturing planner on the 787 program at Everett, surrounded by several thousand Boeing employees, whooping with glee despite the constant rain.
Embodied in this incredible machine are 95 years of Boeing aerospace know-how, said Boeing Chief Executive Jim McNerney at the handover ceremony, acknowledging the long, rocky road the Dreamliner has traveled.
Supplier problems, late design changes and a two-month strike on the production line have put the new aircraft more than three years behind schedule.
Under Boeing's program accounting -- which allows it to smooth out costs over many years -- McNerney said the 787 was already profitable. He said cash from sales of each plane will outweigh costs per plane later this decade.
Boeing shares rose 4.2 percent on Monday to close at $62.01 on the New York Stock Exchange. (Graphic on Dreamliner timeline: http://r.reuters.com/hyx83s )
I cannot wait to see the day when the skies of the world are filled with 787s, said ANA Chief Executive Shinichiro Ito, whose airline originally expected to receive its first 787 in May 2008.
Hundreds of Boeing workers were taught on the eve of the ceremony how to bow in unison as a mark of respect for ANA's Ito, whose company formally took control of the first of its 55 Dreamliners on Sunday.
Thank you for your patience, one Boeing employee hollered at Ito during the ceremony.
The event was a tonic for Boeing workers after the last-minute cancellation of the delivery of the first 747-8 freighter to Cargolux last week, which was to have featured a performance by the Steve Miller Band.
HARD WORK AHEAD
The planemaker's Everett wide-body production facility -- where the handover ceremony took place -- is packed with undelivered aircraft in a sign of an inventory build-up pegged at more than $16 billion, sitting on the Boeing balance sheet.
Dozens of aircraft were parked around the site in various stages of readiness, some with billowing plastic covers over their cockpits and engines or with weight-balancing yellow blocks hanging off the wings where the engines will be.
Investors are now waiting to see whether Boeing can pull a rabbit out a hat and meet its production goals after seven postponements adding up to more than three years of delays.
Now is the time for Boeing looking forwards and not backward, concentrate on the manufacturing process and satisfy the customer, said Howard Wheeldon, senior strategist at London brokerage BGC Partners. Once they do that the rest will fall into place.
Boeing plans to lift production to 10 787 Dreamliners a month by the end of 2013, while also pushing up production of the 737 narrowbody, upgrading the same model and gearing up for production of a 767 aerial tanker for the U.S. Air Force.
We'll be at two and a half (787s per month) by the end of this year, said Pat Shanahan, general manager of Boeing's airplane programs, after the ceremony. Those planes will come from Everett, with a new plant in North Charleston, South Carolina, adding to the production.
Boeing is looking to raise that rate to 3.5 per month in the first part of next year, Boeing commercial planes chief Jim Albaugh later told reporters.
After seven delays, analysts say Boeing is under pressure to prevent further slippage.
We share some apprehension with the market about the achievability of that plan, which will take us to a very high production rate for a wide-body aircraft, said aerospace analyst Carter Copeland at Barclays Capital in New York.
Given the stops and starts and problems it is natural for investors to have some concerns about achievability but the company seems confident.
SURGE LINE
Boeing's Everett plant contains four 787s in one bay of its giant assembly hall, with other 787s parked in an area set aside for completion work. Each aircraft currently stays for 10 days at each point on the line, but this will have to be accelerated as production increases.
The main line is designed to rise to seven aircraft a month. A second temporary surge line is being readied to tackle three aircraft a month when necessary and the facility in South Carolina will assemble three a month.
The surge line will partly allow Boeing to smooth out alterations of production flow between two models of the aircraft currently on sale.
(Reporting by Tim Hepher and Bill Rigby in Seattle, additional reporting by Kyle Peterson in Chicago; editing by Matthew Lewis, Phil Berlowitz)
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