This time last year, Boeing Commercial Airplanes was struggling to nurse the 747-8 and 787 into service after long delays. While then-chief Jim Albaugh debated whether to re-engine the 737 or go for all-new, Airbus stole an A320 order and an A320neo commitment from traditional Boeing customer American Airlines.
Boeing's second-quarter results underscore how quickly things can change. Free from developmental distractions, the airframer hit a 12-year high with second-quarter aircraft deliveries, allowing the commercial division to drive quarterly revenues past the $20 billion mark for the first time. The 737 Max sparked a surge of orders in the year's first half, though the A320neo still has the lead on firm orders, by a margin exceeding 2:1.
Commercial demand is still booming and defence revenues are holding up despite the company's largest single customer - the US Department of Defense - being poised to enter an extended spending down-cycle. Yet there is an uncomfortable uncertainty. Boeing's commercial future success could be less secure than its formidable, $300 billion order backlog might suggest.
In the late 1990s, booming commercial demand drove record order backlogs, but Boeing's supply chain proved unable to handle a surge in production rates. There were struggles to increase production of the next-generation 737, in particular, as Boeing rolled out a new purchasing system for parts and, at its Wichita subsidiary, deployed a new automated fastening system for the fuselage.
Boeing, like any aircraft manufacturer, is only as good as its supply chain. Design problems, such as a faulty side-of-body, were only a small part of the issues that plagued 787 development. Far more troublesome were production system breakdowns ranging from fastener shortages to a supplier meltdown on assemblies of the aft and centre fuselage sections. To sustain upward momentum, Boeing must keep such episodes in the past. Nowhere is this more vital than the 787 programme. The Dreamliner will not generate a profit for 10 years, and that timeline is only possible if the programme can nearly triple output within the next 17 months.
The 787 final assembly system has been expanded with three separate lines. But the final assembly stage means nothing without a robust subassembly process, and that is where Boeing has struggled most.
The good news for Boeing's commercial division is that market demand is in its favour, which puts it in control of its destiny. We will soon find out how well it has learned from its own mistakes.
(This appears as the main leading article in Flight International, 31 July)
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