Boeing: October 2008 Archives

I'm always a big fan when blogs break news, so I enjoyed FleetBuzz Editorial reporting that 787s brake control software was no longer an issue.

"The issues with the brake software are behind us, functionality required for flight test is in the labs and is working well. (The final "blue label" version -- for flight test -- is in the lab and is undergoing tests, all known software problems are resolved. The formal "red label" version will follow in two weeks. We plan on a service-ready update during flight test that adds some additional functionality including tire pressure, operator initiated test, and dataload)," said 787 spokeswoman Yvonne Leach.

The electric brake control software was cited over the summer by program VP Pat Shanahan as one of the key pacing items for the aircraft. The software for the control system is supplied by subcontactor Crane.

Back in July, when the last official program update was provided, Shanahan said four items were still remaining before first flight could happen.

1. Complete Dreamliner One
2. High-blow test - COMPLETE
3. Limit load tests on the leading and trailing edges - Boeing says an announcement will be made when these tests are completed
4. Ground vibration tests on Dreamliner Two

Question: What's up with Dreamliner One? Let me know: flightblogger (at) gmail (dot) com

This day deserves a round up of all the Boeing news that is currently making me cross-eyed.

Boeing and the IAM are cited as one of four causes for economic slowdown in the US by the White House:

"Today's G.D.P. report is weak, but it is not unexpected," a White House spokeswoman Dana M. Perino. "A number of things contributed to the slowing economy in the third quarter -- record high energy prices, housing and credit concerns, two major hurricanes and a prolonged Boeing strike."

Boeing released a podcast this afternoon (props to TBC on the new media!) and made some significant news with its content. MIke Denton, VP of Engineering says that Boeing is insourcing significant detailed design work for 787-9.

One of the really important things that our teams need to know is that we have learned as a management team from the lessons of the 787-8. so the way we do the -9 in terms of how the design work is shared between partners and the Boeing company will be revised.

So the end result of that is that we had a fair bit of incomplete build and incomplete design and a lot of traveled work that came to our factories here in Everett Washington. And our engineers and production workers are basically correcting the problems that should have never come to us in the first place. Problems that are the result of the partners really not being done. That's really unfortunate.

We will do more of the detailed design work on the 787-9 than we did on the -8. We are working out those details with some of our affected partners now. For the next new airplane and the bright future is there will be a next new airplane we will look at how the partner model went on the 787.

The podcast itself is a significant mea culpa on the issues with the 787 program in acknowledging what went wrong and where. Though the biggest play is to throw a significant carrot to SPEEA whose biggest grievance has been the continued outsouring of engineering work to risk sharing partners and engineering centers outside the US.

READ THE FULL PODCAST TRANSCRIPT

Shot:

Denton: The challenges for SPEEA and our working with them is that -- just as we have new leaders in the Boeing side in Doug Kight and Tom Easley -- the SPEAA team is represented by a new executive director. So part of successful negotiation is establishing a good working relationship. So right now we are in the process of developing that relationship and defining the new norms for how we'll do our negotiating.

Chaser:

From @SPEEA at 6:46 PM ET 10/30: SPEEA ends today's meeting early citing Boeing intransigence

ATW reports today that Jetstar is expecting an additional six-month delay on getting its first 787.

QANTAS' low cost arm is expecting Ship 21 in November 2009, but that, according to the airline, appears unlikely. An additional six month slip for early customers could put the first delivery to ANA as far out as February 2010, assuming August 15, 2009 as the current delivery date.

Jetstar Airways executives told ATWOnline this week that the LCC's first 787 is not expected until May 2010, 21 months later than the original schedule. A spokesperson added, "Based on what we have been told, we are working on contingencies and planning for a further three-to-six-month delay in our delivery, although Boeing is yet to formally confirm that." The lag is far longer than the 54-day IAM strike and confirms ATWOnline's report last month that there has been further slippage in the program, possibly due to brake control issues.

Also, Ethiopian news site Nazret.com cites a Reuters report from Addis Ababa that Ethiopian Airlines is expecting its first 787 by the end of next year:

It already has 10 Boeing Co 787 aircraft on order, the first of which is now due to be delivered in December 2009, after supply chain problems delayed the programme by at least 16 months. The airline is looking to order more Boeing 787 aircrafts or order Airbus A350 XWB.

A picture begins to emerge of the (existing) 2009 delivery schedule for the first 25 units based on published reports. These targets are all likely to slip in to 2010.

ANA - ZA007 - August 2009
JAL - ZA020 - October 2009
Jetstar - ZA021 - November 2009
Air India - ZA025 - November 2009
Ethiopian - ZA026 - December 2009

And finally this from Flight:

Boeing's finance unit may raise a $5 billion warchest that could be used to buy aircraft for leasing, to make loans to customers or to fund acquisitions of other businesses.

The most likely use of these funds would be for financing aircraft purchases in the year to come.

If we stretch the speculative imagination a bit, these same funds could be used to buy out Alenia on the 2nd half of Global Aeronautica in Charleston. There are loud rumblings that an acquisition could provide Boeing additional stability for the 787 production ramp up. The first 50% from Vought cost about $47 million. $5B would easily cover the remaining 50%. What about expansion of San Antonio? After all there was this item from yesterday's Seattle Times:

[The new IAM contract] gives the union a new right to bid for work being considered for transfer to a nonunion Boeing facility.

This could become important if, say, Boeing decided it wanted to move more 787 work to San Antonio, Texas -- a nonunion location already assigned to do any necessary changes on some of the early production airplanes.

Thoughts?

You can always count on earnings reports to reveal information that doesn't always make it into a press release. Spirit Aerosystems released its 3Q earnings report today and they announced the company has completed the upper lobe of  Section 41 for the first 747-8F.

Spirit even threw a small picture right in the presentation. It doesn't look a heck of a lot different from any other 747-400, but this airplane is quickly becoming a reality.


UPDATE: I have a question that needs an answer - Does the General Electric GEnx-1B engine have to fly on 787 before the GEnx-2B engine can fly on the 747-8F?

Source: Seattle Times

• New contract is for four years.
• 15% pay raise over the course of the contract, which will come in 5, 3, 3, and 4 percent over the years of the contract.
• Minimum wages raised $2.28. Recent hires will get a supplemental raise to boost them past the entry level for new hires.
• Vendors will deliver parts to receiving areas inside the factory, but machinists will handle parts after that on legacy programs. (737, 747, 767, 777)
  
• Vendors will continue to deliver parts directly to the 787 assembly line.
  
• Machinists currently working in facilities maintenance are protected from layoffs due to outsourcing.
• No increase in medical plan costs for employees
• Monthly pension $81/yr service for 3 years, then $83/yr service the 4th year.
• Lump-sum payments: $5000 or 10% annual salary for 1st year, $1,500 2nd and 3rd year.

A vote by the IAM membership could come in three to five days and requires a simple majority (50% +1) to ratify the new contract.

From: IAM751.org

October 27, 2008 - Machinists in Tentative Deal with Boeing

NOTE: Details on the agreement will be posted on the website tomorrow.

The International Association of Machinists and Aerospace Workers (IAM) announced today that it reached a tentative agreement with the Boeing Company on a contract that will provide job security for its members and limit the amount of work outside vendors can perform in the workplace.

The agreement was hammered out over a five-day period with assistance from federal mediators and participation at the bargaining table by IAM International President Tom Buffenbarger and IAM General Vice President Rich Michalski. Additional resources and technical support was provided by various departments at IAM headquarters.

Job security and the use of vendors were key issues in the strike that began on Sept. 6, 2008. Among the other issues resolved in the latest round of bargaining were wage rates, health care benefits for current and future employees, pension improvements and work rule changes designed to improve productivity.

Full details of the 4-year accord will be withheld until they can be compiled and distributed to IAM members in all Boeing locations.

The tentative agreement has the unanimous endorsement of the IAM negotiating committee and will be presented to members for a ratification vote, which will take place in 3-5 days. A simple majority is required to ratify the tentative agreement.

"After 52 days of striking, we have gained important and substantial improvements over the Company's last, best and final offer that was rejected on September 3rd. Your solidarity brought Boeing back to the table and made this Company address your issues," stated District 751 President Tom Wroblewski. "Each of you stood up and did your part to win this battle, which was a fight against more than just Boeing, but against corporate America. Boeing is profitable because of our members' hard work and by standing together our members ensured they receive a bigger share of those profits."

"This tentative agreement is the result of hard work and great sacrifice by many people," said IAM Aerospace Coordinator Mark Blondin. "But no one deserves more credit than the workers at Boeing, who conducted themselves with dignity and determination throughout this ordeal. On behalf of the entire negotiating committee, I want to say it has been our honor to serve as their representatives."

In a statement set to be released later this morning, and obtained exclusively by FlightBlogger, the Society of Professional Engineering Employees in Aerospace (SPEEA), Boeing's engineers union, is using the specre of leveraging "a thousand possible chokepoints" if "negotiations don't result in a contract that honors the contributions of SPEEA members to Boeing's success."

The comments come from Ray Goforth, SPEEA's Executive Director, just 24-hours before main table negotiations are set to begin in Seattle between the two parties on Tuesday.

Goforth cited a meeting Friday between himself, SPEEA President Cynthia Cole and leaders of the UNI Global Union, the world's largest union coalition to discuss the negotiations and plan for international support for the technical workforce.

A message (or tweet), sent from SPEEA's Twitter feed provided a glimpse into the Union's strategy and potential tactics for engaging Boeing in its contract negotations.

"Met with representatives from international unions about coordinating labor actions at global suppliers in support of SPEEA negotiations," said SPEEA's tweet dated Friday, October 24 at 9:01 PM PT.

The decentralized, yet interconnected nature of Boeing's supply chain, which SPEEA feels should be reigned in and brought back under the operation of Boeing, is being transformed from a point of grievance to a point of leverage by the engineers union.

The late hour of receipt of the statement and publication prohibited a comment from being obtained from Boeing. This story will be updated later today to reflect Boeing's point of view in the interest of fairness to both parties.

SPEEA's negotiations involve two contracts. The first covers 13,390 engineers and a second for 6,889 technical workers. The majority of employees are based in the Puget Sound region, but also cover some employees in Oregon, Utah and California. Both contracts expire December 1.

In addition, negotiations for 700 engineers at Boeing's Wichita facility begin November 13, with a contract expiration on December 5.

On the other side of the country in Washington, DC, senior leadership from Boeing and its machinists union continue to negotiate behind closed doors in an effort to end the eight week old strike that has halted jetliner production in Washington, Oregon and Kansas.

Neither side has released any public statement regarding the progress of the negotiations.

Read the full release (PDF).

Vought today announced that it has significantly scaled back operations at several of its assembly facilities due to the ongoing IAM strikes at Boeing and one of its Nashville facilities.

"In response to the Boeing IAM strike, we have modified our operations and reached an agreement with Boeing to minimize impacts on our operating results, working capital and liquidity," said Steve Davis, vice president and general manager, Vought Commercial Aerostructures Division. "In addition, we have put in place our contingency plan in response to the Nashville strike."

Vought Aircraft Industries is responsible for the fabrication of aft fuselage Sections 47 and 48 of the Boeing 787 Dreamliner in North Charleston, SC.

Vought says it suspended 787 composite bond fabrication operations, affecting production and support personnel. Assembly staff has been reassigned to work on existing shipsets closest to completion.

In addition, over the next 30 days, Vought will be reviewing a number of additional contingencies including possible temporary shut down of the entire North Charleston facility.

"This is a challenging time for all of us who support the Dreamliner program," said Joy Romero, vice president and general manager, 787 Program. "Since the beginning of the Boeing strike, we've been looking at ways to mitigate potential employee job loss in North Charleston, including the initial reduction of outside contract labor. We plan to work with our employees to identify temporary redeployment opportunities at other Vought locations, where possible."

According to Charleston-based sources, the aft fuselage sections of Dreamliners Five, Six, Seven and Eight are all undergoing final systems integration. Work on Dreamliners Ten through Nineteen is on hold as Vought focuses on completing these barrels.

According to the same source, completion on Dreamliner Five currently stands above 90%, the highest level of completion of any aft fuselage section to date. The ongoing IAM strike has allowed Vought to focus on further reducing the level of incomplete work travelling to final assembly in Everett, WA.

Final systems integration takes place in what is known as 'Cell 215' at the North Charleston, SC facility, which accommodates up to four fuselage barrels at a time. Vought has fabricated 19 production barrels to date and has delivered four, plus an additional two for the static and fatigue test airframes.

Dreamliner Nine will enter Cell 215 when Dreamliner Five completes final systems integration, and currently occupies Cell 210 where Section 47 and 48 barrels are joined.

Vought's Nashville facility that handles A330/A340 wing components, the Gulfstream G450 wing, C-130 empennage and wing panels for the Cessna Citation X has also been impacted by an IAM strike of its own.

The employees voted to strike on September 27 and the facility has remained open by hiring additional experienced contract labor and shifting personnel from other sites to Nashville.

Photo Credit: FlightBlogger - June 2008. Dreamliner Five, Six, Seven and Eight at Vought Aircraft Industries in North Charleston, SC.

In August of 2007, I quietly launched a tracking site for the three (then two) 747 Large Cargo Freighter Dreamlifters. The aircraft are responsible for transporting the wings, fuselage and horizontal stabilizer from around the world to Everett, WA for final assembly.

The changes to the blog include an updated tracking metric for 41 different active flight numbers that are assigned to the LCF, as well as a few tweaks to the look and feel of the site.

Each flight is operated by Evergreen International Aviation which is responsible for the Dreamlifters. Flights are split into two categories: training flights and operational movements.

Training flights (EIA4XX) are for crew familiarization/training and flights to maintenance facilities. Operational movements (EIA51XX) consist of movement of 787 structure or returning shipping fixtures.

Since the strike began, there has only been one 51XX flight. It was on September 7 from Anchorage, AK to Charleston, SC. All the other movements since the strike began have been 4XX flights.

Earlier this week, the Dreamlifter (N249BA) flew from Nagoya (spotted) to Portland (spotted) and then on to Charleston as EIA5186. This is the first formal LCF flight in seven-plus weeks. What is currently unclear is whether or not any structure was transported to Charleston. The NGO-PDX-CHS route would suggest that Section 43 and 45/11 for LN9 would be on its way to Global Aeronautica, but I don't have any kind of confirmation on this.

Any information on the aircraft's contents (if any) would be very helpful.

According to the FAA N-number registry, Boeing has reserved N747EX for the first 747-8F. The aircraft, serial number 35808, is destined for Cargolux at the conclusion of the flight test program that is slated to start next year.

FAA Registry
N-Number Inquiry Results

N747EX is Assigned
Aircraft Description

Serial Number: 35808
Manufacturer Name: BOEING
Model: 747-8R7
Type Aircraft: Fixed Wing Multi-Engine

Boeing will be holding its 3rd quarter earnings conference call at 10:30 AM ET. It is expected that the company will provide an initial assessment of the impact of the IAM strike, as well as its effect on the 787 program.

Boeing Posts Lower Third-Quarter Results on Reduced Commercial Deliveries
- Third-quarter revenues declined to $15.3 billion from $16.5 billion as labor strike and supplier production problems pushed airplane deliveries out of the quarter
- EPS declined to $0.96 per share, reduced by an estimated $0.60 on the lower deliveries and by $0.08 due to tax adjustments
- Backlog grew to a record $349 billion as near-term demand remains strong
- Updated financial guidance to be provided after strike concludes

Transcript below the fold.

The week the IAM strike began, the Dow Jones Industrial Average was trading at 11,500. Seven weeks later, the DJIA is trading almost 2500 points lower and this planet is face-to-face with the spectre of a global recession.

Having watched the strike unfold, it has become easy to lose sight of those at the center of the debate. The story of the strike at its heart is about outsourcing, the 787 program and the future of jetliner production. Though if these issues speak to its heart, its soul is found in the 27,000 people, customers and supplier held in limbo, unsure of what's next.

The IAM membership was given reassurances by their union leadership that a vote to strike in the face of what they felt was an inadequate contract would eventually yield a better outcome than first presented. They had fair reason to see it that way. The IAM cited $13 billion in profit, a record $160 billion 787 backlog and more than 3000 orders waiting to be filled. There was no reason why, as the IAM saw it, that they couldn't negotiate a contract with Boeing that would leave them better off than they were three years prior.

I spoke to one 787 machinist last week, whose frustration over the situation was evident. His lament was less about the specific minutiae of negotiations and spoke to the perceived culture that each side has brought to the table and has cornered suppliers, customers, the workforce and their families.

"I don't know exactly what they are bargaining for currently, but I'm sure they aren't doing any, just telling each other what they want. There is no give and take. Only demands."

This machinist prepared for the strike with his family by saving in advance, though he has faced the challenge of not being able to find temporary work in a sagging economy. Local businesses are hesitant to hire someone who they know will leave once the strike ends.

Thursday's restart of negotiations is vital progress, yet each side must go in realizing what is at stake. Each side has much to lose if the talks fail, but an amicable solution allows both much to gain.

A senior labor leader speaking about the upcoming SPEEA negotiations made an interesting point that carries over to the IAM negotiations:

"The workforce wants to be treated as an important part of the team not like a vendor selling Chicago a service. Boeing's best-and-final offer needs to speak to this emotional need.  It has to make the members feel valued.  If it doesn't, then the specific numbers in the pay raise, retirement, etc. will fall in importance. Collective bargaining isn't a math problem.  It's managing a relationship."

Both sides must keep in mind that the longer this impasse continues, Boeing is more and more likely to move significant production operations out of Puget Sound to right-to-work states like Texas. In addition, Boeing risks being branded as unreliable by its customers, potentially putting future orders in jeopardy.

It is said that a good compromise is one where both and neither side is happy with the final result. Boeing and the IAM must not let the perfect be the enemy of the good and end this strike.

Just finished up recording a podcast with Addison Schonland and Scott Hamilton on industry goings-on, including the issue of fuel hedges for Southwest and the American Airlines order.

LISTEN NOW

NEW INFO: The first 787-9 for Air New Zealand will be the 88th Dreamliner out of the factory, which is currently set to be delivered in early 2012. By comparison, American Airlines will get their first 787-9 (if labor concessions are met) in September 2012. With this in mind, American should be getting one of the earlier 787-9s off the line.

UPDATE: Take a look at this video Boeing created for American!

American Airlines has signed a purchase agreement with Boeing for up to 100 787-9 Dreamliners. The initial order is for 42 aircraft with rights for an additional 58.

American Airlines Takes Major Fleet Renewal Step by Announcing Plans to Acquire Boeing 787-9 Dreamliners
FORT WORTH, Texas, Oct. 15 /PRNewswire-FirstCall/ -- American Airlines, Inc., a wholly-owned subsidiary of AMR Corporation (NYSE: AMR), announced today that it has entered into a purchase agreement with Boeing (NYSE: BA) under which American intends to acquire an initial 42 Boeing 787-9 Dreamliners scheduled for delivery beginning in 2012 and ending in 2018, with the right to purchase up to 58 additional 787s that may be scheduled for delivery beginning in 2015 and ending in 2020. The purchase of the initial 42 787-9 aircraft is subject to certain contingency provisions, as more fully described below.

Key provision:

The 787 purchase agreement contains provisions that would allow American to choose not to acquire some or all of the 42 initial 787s if it has not reached a satisfactory agreement with its pilots union to operate the aircraft. American must notify Boeing of its intent to purchase a 787 at least 18 months prior to its scheduled delivery date, with the first scheduled delivery date occurring in September 2012.

UPDATE 12:22 PM: If all 42 787-9s taken up by American Airlines, it would make the order the largest for a North American airline. ILFC currently holds a firm order for 74 787s.

Sixteen months ago, I prematurely reported on an American Airlines order for 100 787s that was supposed to happen at the Paris Air Show. I was slightly off, but better early than never?

A September 2012 delivery would make American a very early recipient for the -9 variant of the 787. As of April, launch customer Air New Zealand was expecting its first -9 in early 2012 when Boeing last revised its delivery schedule. With the ongoing strike and potential slip of first delivery to 2010 for ANA, it remains an open question whether or not American has received a delivery timeline based on a revised schedule or the existing one which targets 25 deliveries in 2009.

This is a breaking story and will be updated.
Image courtesy American Airlines

Late yesterday evening, Boeing and the IAM announced that both sides had walked away from the bargaining table as talks had once again broken down in an effort to negotiate an acceptable contract and end the 39 day strike that has paralyzed jetliner production.

As a result. Boeing has now begun to publicly speculate that first flight for 787 could move into 2009, while maintaining officially that first flight will occur in 2008.

Randy Tinseth, Vice President of Marketing for Boeing Commercial Aircraft, said in Paris today that:

"There is no question that a prolonged strike will move the first flight into next year. But we don't know how long it will last."

We are looking very closely at it. An extended strike will push the first flight into next year. Whether we are in an extended strike is something we are looking at."

An assessment of the 787 schedules obtained by this blogger, point to a January first flight at the earliest. This conclusion is based on several key assumptions.

1.    According to program sources, assembly of Dreamliner One was set to be completed on August 31, but was pushed to October 6 before the strike began.
2.    The same schedules indicate that first flight was originally set for October 29, but had shifted into November as of the Farnborough Air Show in July.
3.    Boeing expects a one-for-one slip in the 787 schedule due to the strike.

Key ground vibration tests need to be completed on Dreamliner Two before Dreamliner One can fly as well. With a 36-day slip in assembly completion and 39-day strike, the October 29 first flight now finds itself in January.

Thousand point spikes and drops are enough to make my stomach churn. Since September 12, the Dow Jones Industrial Average has only had three days where the close at the end of the day was less than 100 points difference from the opening, and even on those days the market swung wildly during trading. All this volatility could be bad for business and bad for backlogs.

With the global economy [insert perilous sounding metaphor], consumers are taking a more conservative approach with their finances. Americans are already cutting back on traveling, shopping and eating out to save where they can. With less movement of goods and people, energy costs will begin to drop with the reduced demand. In just the last two weeks, the price at the pump fell 36 cents, the steepest drop ever.

Which brings me to a comment made two weeks ago by Boeing CEO Jim McNerney:

Our airline customers already are struggling to operate profitably under volatile and high fuel prices. A reduction in business and leisure travel would further damage their fragile health and potentially impact the sales of our airplanes and services. However, the flip side of the high fuel price coin is that demand in the market for our fuel-efficient new airplanes remains high, and we have seen few order deferrals or cancellations. [Emphasis mine]

Mr. McNerney is absolutely right, but what happens if the other side of the coin is wiped clean? What if the high fuel price is no longer a factor?

Did the pain of $140 forever impress upon airlines the need for new fuel efficient aircraft? Or has the pain subsided as capacity cuts have given way to a healthy influx of cash?

The Seattle Post-Intelligencer identified a 'triple threat' to Boeing that included the on-going strike, 787 delays and an inability for its customers to secure financing. The first three are accurate representations for Boeing, but a fourth threat is one that could strike at Airbus, Bombardier and Embraer as well.

How low and for how long does oil have to remain cheap for backlogs to feel the pain? If airlines are able to operate profitably without new fuel-efficient aircraft, does it still make sense to buy new equipment?

UBS analyst David Strauss released a report earlier today stating that the first 787 deliveries will not take place until 2010. Strauss cites the original schedule for flight test aircraft laid out in April, which says first flight was supposed to take place October 29, following a targeted assembly completion of August 31.

The assembly completion of Dreamliner One slipped to October 6 prior to the strike. FlightBlogger is not able to confirm one way or another currently if assembly completion was reached per the revised schedule, though this blogger has learned the left engine was recently reinstalled and the aircraft has been powered on consistently in recent days.

The schedule, published by UBS and confirmed by FlightBlogger, also states that assembly was set to be completed on September 10 and September 25 for Dreamliners Two and Three, respectively. Strauss identifies the strike, along with a five week slip in assembly completion on Dreamliner One, as the primary catalyst for his bearish analysis.

Watching flights into Paine Field in Everett: We are tracking movements of Boeing's modified 747 "Dreamlifter" fleet to gauge the progress of 787 production. Specifically, we are monitoring Dreamlifter flights into Snohomish County Paine Field Airport (KPAE) in Everett WA, adjacent to 787 production, to gauge the pace of shipments from the major structural suppliers. Major structural components are delivered via the Dreamlifter fleet to Boeing in Everett and include the wings from Japan, aft fuselage from Charleston SC, center fuselage from Italy (via Charleston), and forward fuselage from Wichita KS.

Strike halts already slow-paced structural deliveries: We did not track any Dreamlifter flights into Everett in September as Boeing has apparently halted all 787 deliveries from its suppliers given the ongoing Machinists strike. We continued to track some center fuselage deliveries to Charleston.

Flight test program now unlikely to complete prior to early 2010: Even prior to the Machinists strike that began in September, the slow pace of structural deliveries had led us to believe that Boeing was highly unlikely to hit its revised 787 flight test schedule. Boeing has now missed the scheduled assembly complete dates for the first three flight test aircraft and we believe the flight test program is unlikely to complete prior to early 2010.

With this new assessment, launch customer All Nippon Airways of Japan will not receive its first 787 next year. James Wallace of the Seattle Post Intelligencer reports in his blog today that the airline was set to receive ZA007 (JA801A) on August 15, 2009.

With the global markets in free fall, along with this grim new assessment, Boeing's stock today was trading at the same level it was on the day the 7E7 was launched in April of 2004.

Without any deliveries in 2010, Boeing's production ramp up would be snarled, inevitably forcing a revamp of its previous production forecasting. Geoffrey Thomas of The Australian reported last week that:

Following the most recently announced delay in April, it was expected that the company would deliver 25 next year, 69 in 2010, 103 in 2011 and 120 in 2012.

Boeing still maintains it is targeting 2008 for first flight of the 787. If this goal is accomplished, however unlikely, the challenge of getting the remaining flight test aircraft airborne remains extremely difficult without the machinists who were responsible for the remaining structural work that was still yet to be completed on ZA002, ZA003 and ZA004.

This story has moved on while I have been travelling back from NBAA and has been slightly amended as a result...

Two seemingly unrelated, yet interconnected, stories are breaking within minutes of one another this evening.

Flight is reporting that first flight of the oft-delayed Boeing 787 Dreamliner is still expected to happen in the last quarter of this year, and the Seattle Times is reporting that the airframer has also resumed negotiations with its largest Union, the International Association of Machinists and Aerospace Workers, which has been on strike for more than a month.

2008 first flight for 787 Dreamliner still the target says Boeing
By Mary Kirby

Boeing is maintaining that the 787's maiden flight will occur during the fourth quarter of this year.

A Boeing spokesman stated the airframer will have "more specific airplane performance data following flight testing. That's scheduled to happen first quarter 2009."

However the spokesman went on to clarify that Boeing are still aiming for a 2008 first flight: "When I was referring to flight testing in the first quarter, I was referring to performance flight testing. We are still planning first flight for the fourth quarter."

Boeing, Machinists will resume talks in monthlong strike
By Dominic Gates

Following a top-level meeting this afternoon, Boeing and the Machinists union have agreed to go back to the table and to resume contract negotiations -- though the strike will continue.

International Association of Machinists (IAM) leaders Mark Blondin and Tom Wroblewski met in Everett with Boeing commercial airplanes chief executive Scott Carson, labor vice president Doug Kight and chief company negotiator Tom Easley.

The agreement comes on day 33 of the strike by 27,000 machinists, which has halted aircraft and parts production in the Puget Sound region, in Portland and in Wichita, Kan.

Uncertainty has ruled over this last month on both the 787 program and IAM strike. Let's hope that these latest developments produce some clarity for Boeing, its employees and its customers.

Image credit: FlightBlogger

Speaking directly to 160,000 employees in a wide-ranging message regarding the US financial crisis, Boeing CEO Jim McNerney says the aerospace giant is well positioned to support financing of aircraft purchases itself, if called upon to do so by its customers.

The message, entitled "U.S. financial crisis: What does it mean for Boeing?" was obtained by FlightBlogger and its authenticity was confirmed by the company.

McNerney's message addresses four points: The stability of aircraft financing options, the impact of the bailout on the federal deficit and defense spending, the impact on airlines and global travel, and lastly the mindset of the Boeing workforce.

"Thus far, we've seen minimal impact and nothing to change our fundamental assumptions for delivering our record backlog. But we stand ready to help our customers, if needed. Over the past few years we have greatly reduced financial risk at Boeing Capital Corp.., which has strengthened its balance sheet substantially. So we are in a strong position to provide aircraft financing if necessary."

"While we have seen a very slight increase recently in customers asking about the possibility of our financing their purchases, none have actually requested it yet. But it's a fluid situation, and we will continue to monitor it closely."

According to Boeing, the company has not had to finance new aircraft purchases itself in more than two years.

McNerney also addresses speculation on the impact of the financial crisis on the Integrated Defense Systems division, due to tightening budgets at the Pentagon forcing potential cutbacks in spending for military systems.

"No one really yet knows when or to what extent defense spending could be affected, but it's unrealistic to think there won't be some measure of impact."

For airlines, McNerney sees the financial crisis as a double-edged sword, addressing the likelihood of deferred or canceled orders balanced against the demand for new fuel-efficient aircraft to offset rising oil prices.

"Our airline customers already are struggling to operate profitably under volatile and high fuel prices. A reduction in business and leisure travel would further damage their fragile health and potentially impact the sales of our airplanes and services. However, the flip side of the high fuel price coin is that demand in the market for our fuel-efficient new airplanes remains high, and we have seen few order deferrals or cancellations."

McNerney urged his workforce to "anticipate and respond while staying focused on our customers."

In addition, McNerney acknowledges a potential short-term impact of the crisis:

"As we monitor the situation over the coming days and weeks, we will be taking a very close look at our plans for the balance of this year and 2009."

Though not referenced specifically, a Boeing spokesman adds that "the situation" McNerney references includes, but is not limited to, the impact of the ongoing IAM strike, as well as plans for 787 first flight, certification and 2009 deliveries.

McNerney closes on a cautious, yet optimistic note in his message:

"This could turn out to be the "rainy day" we've been saving for--and must continue to save for."

"In large part because of your ongoing efforts, Boeing is well positioned to weather it--even if our road contains some rough patches that may require us to step up and do even more."

Read the complete message to employees