Jon Ostrower : 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 piece is cross-posted at the Adventure Quest travel blog

The question was raised on a travel blog earlier this week about the necessity for small countries to operate airlines of their own. The question of justification came to the fore when looking at Surinam Airways, an unlikely country to have an airline, and whether or not a country with a gross domestic product of $2.4b should have (or needs) an airline of its own.

For nations large and small, rich and poor, civil aviation has been a vital tool to connect citizens with the world on its own terms.

"International aviation is thus not just another problem in a changing economic system, though it is that; international civil aviation is a serious problem in international relations, affecting the way governments view one another, the way individual citizens view their own foreign countries, and in a variety of direct and indirect connections and the security arrangements by which we live." - Andreas Lowenfeld

That quote, from a 1975 article in Foreign Affairs Magazine, inspired my senior thesis in College. The title was Aviation as Ambassador, not coincidentally the same name of the first post on FlightBlogger in 2007.

The historical Western global leadership in civil aviation in the first half of the last century has served as an example to all nations as a symbol of modernization and progress.

Civil aircraft (in both their development and operation) are symbols of power and prestige for nations. We need only look to the Boeing 747 and Airbus A380 to see the impact these aircraft have had on the identity of the nations that operate them.

For the United States, the same year Charles Lindbergh flew non-stop from New York to Paris in 1927 (contrary to popular belief he was not the first to cross the Atlantic) Pan American Airways came into being as an airmail service between the Florida Keys and Havana, Cuba. With the relative protection of the US Government, which saw Pan Am as the "chosen instrument" for US travel abroad, the airline quickly became America's flag carrier. Later on in the century, Pan Am would become Boeing's launch customer for the 747.

The idea of a flag carrier in the US is somewhat outmoded though. Pan Am folded in 1991 and TWA in 2001 (merging with American Airlines). Today, we have Delta/Northwest, United, Continental, American and US Airways - so the idea of one airline representing the US abroad is foreign to Americans.

In the case of the US today, international air travel is a representation of the free market forces that enable such competition, multiple airlines competing with one another vying for the attention of the consumer. In the absence of one flag carrier, we find the identity of the United States. Though protectionist tendencies still abound with restrictions on foreign ownership and cabotage.

These same political motivations created (and protected) the airlines of the world's largest economies; Pan Am (defunct), Lufthansa, British Airways, Air France and others are also found in smaller countries like Surinam.

For airlines like Surinam Airways, which operates a fleet of two aircraft, connecting its citizens to the world is an important representation of self-determination and modernization; profitability and operational effectiveness often falls by the wayside.

There are two sides to this coin. A national airline can carry both a positive and negative message about a country. As an extension of national identity, airlines can become a liability  in the event of an accident. Accident prone airlines like Garuda and other Indonesian carriers have found themselves blacklisted by the EU, unable to serve Europe causing  significant damage to the economic health of the nation.

Surinam Airways was founded in 1955 and became the national carrier when Surinam gained independence from the Netherlands in 1975. Today, the airline operates one Boeing 747-300 and McDonnell Douglas MD-82, both built in 1986 for long haul and regional routes respectively serving seven destinations in Europe, North America, the Carribean and South America.

The airline is as much a tool of economic development and tourism as much as it is a diplomatic symbol of Surinam touching down in countries around the world.

For the nations that don't hold significant economic sway, aviation is ambassador.

Photo credit: Pascalg_1991/Creative Commons License

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?

With the help of A380 spotter Sean Taylor, I put together this rundown of key October movements for superjumbo production.

In Service

• MSN014 (VH-OQA) No. 1 for QANTAS entered commercial service on October 20 between MEL and LAX as QF93 and October 24 between SYD and LAX.
  
• MSN013 (A6-EDB) No. 2 for Emirates was delivered from XFW as EK7380 at 07:25 on October 24.

In Toulouse

• MSN021 (F-WWSQ) for Singapore Airlines was spotted on the flight line with engines fitted at TLS on October 24.
  
• MSN026 (F-WWSX/VH-OQD) for No. 4 for QANTAS arrived on the flight line with engines fitted at TLS on October 24. This aircraft is the first Wave 2 A380 to have production standard wiring.
• MSN019 (F-WWSP/9V-SKG) for No. 7 Singapore will be the next A380 to fly at TLS. The aircraft was seen taxiing for the first time on October 27.

In Hamburg

• MSN016 (D-AXAC/A6-EDC) No. 3 for Emirates conducted taxi tests at XFW on October 28. Delivery is expected in November.
  
• MSN015 (VH-OQB) No. 2 for QANTAS undergoing interior outfitting since June 25. Delivery is expected in December.
  
• MSN020 (A6-EDE) No. 4 for Emirates undergoing interior outfitting since July 16. Delivery is expected in December.
• MSN022 (VH-OQC) No. 3 for QANTAS undergoing interior outfitting since August 4. Delivery is expected in December.
• MSN017 (F-WWSN) No. 5 for Emirates was transferred to XFW on October 7.

Photo Credit: David Barrie - MSN026 - Toulouse

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?

I'm working on a bunch of other things this afternoon, but I wanted to keep in touch via Twitter.

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."

The last few weeks, I've used Mondays to feature videos I've come across to ease your transition into the work week, kill your productivity and infuriate your boss. What can I say? I'm just doing my part for the global economy. I began to feel that including the video in the Week Ahead Open Thread wasn't doing it justice. So now, Movie Monday gets its own spot on FlightBlogger.

This weeks movie is from ITVV which is one of the best aviation video producers in the world. It's a plane nut's dream. They tell you what every dial and switch does on the flight deck of this Cathay Pacific 747-400. It's almost like I've learned something from these videos over the years.

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.

Well, it's been one heck of a first year. The Chicago Tribune's Julie Johnsson did a very humbling profile on me yesterday and I wanted to share a bit of it because, really, without all of you I wouldn't be anywhere at all. Thank you.

Blogger gets off ground with 787
Political junkie broke news about Dreamliner delays
By Julie Johnsson - Chicago Tribune
Sunday, October 19, 2008

Blogger Jon Ostrower started out with little more than a battered Dell laptop and a goal of detailing the creation of a groundbreaking airplane, Boeing's 787 Dreamliner.

Ostrower had neither aerospace nor journalism training. But in little more than 18 months, the 24-year-old has significantly altered how aerospace is covered, a world in which work is cloaked in secrecy.

Writing late at night from his Boston living room, he emerged as the go-to source of information about the world's first jetliner made from superhardened plastics, breaking stories of its production woes at a Seattle-area factory.

"This guy's track record is almost in a class by itself," said Richard Aboulafia, who is among the many aviation analysts who read Ostrower closely.

Photo Credit: Terrence Antonio James/Tribune

Last night on Entourage...
HBO's Entourage is one of my favorite shows on television and last night's episode earned its keep: A bizjet lover's dream. Twin Marquis Jet Gulfstreams featured prominently in the close of the episode. If my trained-eye serves me correctly, there was a G450 and G550 in the hangar at Van Nuys, which is actually the busiest general aviation airport in the world.

Negotiations and love songs
Boeing will announce its third quarter earnings in a conference call this Wednesday. In addition to its financial results, the company will provide an impact assessment of the IAM strike on the 787 program and jetliner production at large. The news is not expected to be particularly positive on both fronts, but should provide guidance for what to expect in 2009. I'll be liveblogging the call via twitter.

Matt Cawby had an interesting post on the Everett goings-on since the strike began:

September 12-October 17
Three aircraft delivered.
Five aircraft completed production flight testing.
Two aircraft moved out of the factory to the paint hangar.
787 static airframe air pressure test completed.
No smoking policy in effect on October 1.

Also, SPEEA/Boeing negotiations kick off on the 28th of October. The engineer's contract expires on December 5th at midnight. Much more on this to come.

It came from the land down under
After 13 hours and 59 minutes, VH-OQA touched down in Los Angeles as QANTAS Flight 93. The 14th A380 departed Tullamarine Airport in Melbourne at 11:30 AM October 20th, crossed the International dateline and arrived in LA 4 hours before it left!

QANTAS 93 Flight Plan
Melbourne, Victoria, Australia - Los Angeles, California, United States
Airbus A380 - VH-OQA - MSN014
October 20, 2008

CORRS Y81 GEMAC 3800S 15500E 3800S 16000E 3726S 16300E 3700S 16500E 3500S 17000E 3300S 17500E 2800S 17500W 2500S 17000W 2100S 16500W 1600S 16000W 1227S 15700W 1000S 15500W 0300S 15000W 0148N 14701W 0500N 14500W 1200N 14000W 1800N 13500W 2300N 13000W 2700N 12500W TONYS B200 FICKY C1177 SXC

In other A380 news...
Emirates should be getting it's second A380 on Friday. A6-EDB (MSN013) has been held up in Hamburg for interior installations and should be shipping off to Dubai on October 24. It'll start daily A380 service to New York-JFK on October 26. The superjumbo was spotting doing its interior outfitting flight from XFW yesterday.

Coming soon...
I've talked a bit about Qik streaming 3G video before, but the iPhone is about to get a full fledged application soon. I'm really excited about the potential for covering new events with this technology. The possibilities are endless!

Movie Monday
Another great NOVA episode for you. This time it's 53 minutes on the Wright Brothers experiments that led to the first, first flight in December 1903. Enjoy!

Avidyne invited me to come and see its new products in action at its NBAA booth last week. Tom Harper, Director of Marketing for Avidyne, showed off the the MLX770, which brings text messaging to general aviation, and the not-yet-officially-revealed IFD8000 15-inch twin glass displays with enhanced and synthetic vision systems. These are two very visual products, so I've created two videos for your viewing pleasure to see all the features on these new products.

IFD8000:


MLX770:

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!

It seems to be a now weekly tradition on this blog to reveal more and more detail about the final exterior design of the A350 XWB. This week brings us an even clearer shot of the aircraft's new wings, fuselage and winglets. These pictures come from a competing aviation magazine's advertisements. They shed quite a bit of light about the new widebody's design. From below, the nose even looks to have a 7E7 feel to it. Also worth noticing, the Rolls-Royce Trent XWBs don't feature chevron notches at the back of the nacelles for noise reduction.

I apologize for the quality of the images, my camera was elsewhere.

Two more close up shots after the jump.

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.

Every once in a while I come across an item that just needs some attention. Take, for example, this nice report about Hungarian low cost carrier Wizz Air starting flights between London and cities in Ukraine.

Wizz Air is launching new services from London Luton Airport to two popular destinations in Ukraine. The low-cost carrier has confirmed that it will open up a new link between the UK base and western city of Lviv, operating the service four times a week from January 15.

Both connections will be served by the carrier's new fleet of energy-efficient Airbus A380 aircraft. One-way fares start from just £29, excluding air passenger duty charges.

Good luck getting an A380 off the ground at Luton. Man, people are going to be peeved when they see an A320 pull up.

Airbus A340-600 F-WWCA climbing away from Toulouse on its first flight
with the Pratt & Whitney PurePower PW1000G engine under its wing.

"Demonstrating the geared turbofan technology throughout its entire operating envelope using the Airbus A340 flight test aircraft will provide us with valuable installation and operating data to further evaluate the performance of the new engine architecture," says Todd Kallman, president, Pratt & Whitney Commercial Engines.

READ THE STORY

Image courtesy Pratt & Whitney

More images after the jump

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?

What's up with Dreamliner One?
Aviation Week, Flight's able competitor, reported last week on the start of pre-pre-flight tests for ZA001:

Despite the strike, Boeing's flight-test engineers are planning to start pre-flight tests on ZA001's air data system around Oct. 8. The tests will focus on the probes for the Honeywell system, which is configured with six remotely located air data modules. Data from the sensors will be relayed to the air data computational software hosted on the GE Aviation common core computing system.

Tests on the air data system follow the completion of the high-blow milestone. "As we expected, the structure stood up to the pressure with no issues--a real testament to the composite technology on board the airplane," says a company statement. "We have to complete two more static tests before first flight--one on the leading edges and one on the trailing edges."

Signs of Movement
The Seattle PI reports that Boeing and the IAM have been in secret talks since late last week. I'm not about to jump to conclusions, but this is a darn good sign. The fact that they're talking is progress, so hopefully they are on the road that leads to the road that gets to the off ramp of a resolution to this strike.

Everett photographer Matt Cawby caught a rare mid-day move of the fourth (of eight) TAM 777-300ER to the paint shop yesterday. The day the strike began, that aircraft was closest to the door with the first Qatar 777-200LR following right behind. This is the first high-rate aircraft to leave the Everett factory for the paint shop since the strike began five weeks ago.

A340 GTF First Flight?
Airbus's F-WWCA, the first A340-600, was spotting doing taxi tests with the Pratt & Whitney PW1000G tucked neatly under its wing last week in Toulouse. Those tests are a precursor to the commencement of the 2nd phase of flight testing for the geared turbofan demonstrator engine. The engine was seen Saturday wrapped up like a Christmas stocking with a bright red cover. This shot by photographer David Barrie (and friend of this blog) really captures the size comparison between the PW1000G and the other three Trent 500 engines.

Iraqi Airways Fleet Revival
The once robust Iraqi Airways fleet that was decimated by years of sanctions and conflict has finally seen its first new aircraft in a VERY long time. A beautiful Bombardier CRJ-900 (test reg. C-FULE, sn 15189) in the new blue livery was spotted last week in Canada. The aircraft will become YI-AQA.

Movie Monday
In honor of Columbus Day (either a day off for you or a slow day at your office) I present two hours of fighter jet competition. Nova's Battle of the X-Planes is an extraordinary peek into the world of the competition for the Joint Strike Fighter contract that was awarded to Lockheed Martin. Enjoy!

For more coverage of the Joint Strike Fighter program, check out Steve Trimble's The DEW Line.

I'm taking a vacation!
I haven't really had a vacation for about 13 months, so I decided it's time to skip town. I'll be off Thursday, Friday and Monday. Not to worry, I'll have fresh content up and scheduled for posting while I'm gone. I will be 110% unreachable. Laptop is staying at home and the iPhone is going off.

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.

The subject of the final look and feel of the A350 XWB has been the subject of extensive discussion, mostly of the unserious kind. Yet, after Flight revealed a different nose and window design for Airbus's new long-range widebody two weeks ago, the windows appear to be right back to the original design in another ad running running on flightglobal.com.

What's a nitpicking aircraft junky to make of all this?

Today:
Two weeks ago:
With that being said, check out this video of how Airbus can deck out the XWB Prestige:

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

Boeing Business Jet's VIP model of the 787 Dreamliner at NBAA. Those
lit video screens were actually playing The Matrix on them. It was a
very nice touch.

Bombardier unveiled its Learjet 85 cabin mock-up here at NBAA and I was invited to take a look inside the new Rockwell Collins Pro Line Fusion avionics suite.

UPDATE: See our walk through video of the Learjet 85 cabin mock-up.

The business end of the first composite Bombardier aircraft features three 15.1" (38.4 cm) Active Matrix Liquid Crystal Displays (AMLCD), Electronic Flight Instrument System (EFIS), Dual automatic Attitude Heading Reference System (AHRS), Integrated Flight Information System (IFIS) with electronic charts, One Class II Electronic Flight Bag (EFB), Synthetic Vision System for Situational Awareness (SVS), Terrain Awareness and Warning System (TAWS), Dual Flight Management System (FMS) and a weather radar system.

Wow, that's a lot of alphabet soup! Take a look:

Embraer's Phenom 100 VLJ. I saw 004 in final assembly just before she
first flew in March.

David Velupillai, marketing director for Airbus's executive and private aviation division, generously provided a tour of the Airbus Corporate Jet (ACJ) for us yesterday. This particular A319, operated by Comlux (9F-AFK), is fully decked out. It's got a range of about 6,000 miles with room for 19. Take a look for yourself.

Come along as I explore the NBAA convention hall floor with my iPhone. I'm uploading photos live from my iPhone, so reload this page for updates. If there is anything you'd like to see in particular, please send me an email at flightblogger@gmail.com or @flightblogger me on Twitter. I'm going to be walking around until about 5:30-6:00 PM. Enjoy!

The material below comes from the website http://www.flickr.com/photos/7702824@N03/

Bombardier has its NBAA press conference scheduled for 1:00 PM ET. Follow it here.

Reload this page to see the updated feed.

The material below comes from the website http://www.twitter.com/flightblogger

Transcript is available after the jump.

A350 XWB Prestige model at NBAA.

Hawker Beechcraft is holding a press conference for a new product announcement at 1:00 PM ET. It is expected that Hawker will unveil the new 450XP that was first reported here at FlightBlogger last week.

The material below comes from the website http://www.twitter.com/flightblogger
Transcript after the jump.

Embraer Executive Jets is conducting its NBAA press conference at 11:00 AM ET.

Follow my NBAA coverage at: http://www.twitter.com/flightblogger

Transcript after the jump.

Gulfstream is set to announce its all-new clean sheet design for the G250 aircraft. The new super-midsize jet will replace the G200 in the Gulfstream product line. The G250 will feature the same cross-section as the G200, will be powered by twin Honeywell HTF7500-series turbofans and feature a scaled variant of the G550 wing.

The press conference is scheduled to begin at 10:00 AM ET.

Follow my NBAA coverage at: http://www.twitter.com/flightblogger Transcript after the jump.

Honeywell, which has partnered with commercial manufacturers Airbus and Boeing to offer the IntuVue 3-D Advanced Weather Radar, will offer its big jet hardware as a standard feature for Gulfstream's all-new G650 business jet.

On August 14, 2008, members of the media, including this blogger, were invited by Honeywell for a demonstration of the 3-D weather radar in the skies over central Florida to chase thunderstorms in a 1952 Convair 580 (N580AS).

The IntuVue system, which is currently standard equipment for the Airbus A380 and an option on the Boeing 777 and 737, will be adapted to the Gulfstream G650 by shortening the antenna drive underneath the significantly smaller radome.

Also, the IntuVue will be certified in the first quarter of 2010 as an optional feature for the Airbus A320 and a year later on the A330/A340, as well as standard equipment on the A350 XWB.

The G650 will integrate the IntuVue 3-D weather data into the INAV display in the PlaneView II system based on the Honeywell Primus Epic avionics platform.  

IntuVue, the re-branded name of Honeywell's existing RDR-4000 3-D weather radar, is the company's first foray into offering the scalable technology on smaller platforms to penetrate the general aviation and business jet markets.

Honeywell sees the IntuVue employed on two new business jet platforms within the next three to four years, and adds one of those will be in the very light jet category.

The IntuVue system uses 3-dimensional volumetric scanning to capture all weather data +/-90 degrees to the left and right of the aircraft, optimizing scans relative to the aircraft altitude up to 320 nm and 60,000 feet. The data is then fed into the 3-D buffer to create a picture of the surrounding weather on both horizontal and vertical situation displays.

The IntuVue system can complete a full sweep of the surrounding area in 30 seconds, offering flight crews the ability to detect and avoid previously unforeseen turbulence, wind shears and storm activity.

The selectable azimuth allows for a slice of the weather environment to be examined in the vertical situation display to enable better tactical and strategic route planning.

Because of the 3-dimensional data processing, the IntuVue system is able to compensate for the curvature of the Earth, not by bending the radar beam around the surface, but by extrapolating data relative to the altitude and distance from the aircraft. The aircraft is still limited to line of sight, limiting the return to 320 nm.

Weather data for a given area is stored for six minutes after collection and can display weather information behind the aircraft. This is done in the center display mode showing 2/3 forward and 1/3 behind aircraft or as much as 200 nm.

The 3-D buffer also interacts with Honeywell's Enhanced Ground Proximity Warning System (EGWPS) database to filter ground returns from weather data as to not confuse the pilot. The ground returns are not discarded, but rather stored to create an extended ground map.

The system can operate in multiple modes for strategic (AUTO) and tactical (MANual) weather analysis for both vertical and horizontal route planning.  

In AUTO mode, the radar automatically displays weather based on the aircraft flight path using the vertical rate and ground speed or the programmed FMS flight plan. The aircraft automatically tracks a +/-4000 foot boundary up to 60,000 feet. Weather inside the boundary is considered relevant and displays in solid colors, whereas weather outside the boundary is secondary and displays cross-hatched.

In MANual mode, the radar azimuth can be tilted side to side to create a 3-dimensional vertical cross section of the weather data overlaid on the vertical situation display.

The weather data is independently retrievable by both captain and first officer enabling customized displays for the left and right side displays.

Gulfstream's G650, the manufacturer's largest aircraft to date, will enter service in 2012, following a flight test campaign beginning in the second half of 2009.

Honeywell provided a briefing at 5:00 ET.

Follow it here for liveblogged coverage. Honeywell presented its 2008-2018 market forecast and Embraer provided an update on the design of the Embraer 450/500 aircraft. Transcript after the jump.

Here in Orlando, NBAA is everywhere! Including my room key at my
hotel. Embraer and their line of Executive Jets will get me into my
hotel room.

Can anyone say collectors item?

Mary Kirby found this amazing video floating around Youtube of the new CRJ1000 on its first test flight last month doing a flyby with a CRJ200 off its wing at Mirabel. It's the first video I've seen of the new bird in flight. Check out that wingflex!



C-FRJX has been popping up in Kansas and Arizona recently for Bombardier's flight test campaign.

More shots here, here and here.

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