Should Boeing 787 customers demand new IFE via retrofit?

Although many of them have been reticent to talk about it, Boeing 787 suppliers have watched a lot of their kit sit on shelves for the last few years. And in-flight entertainment (IFE) hardware manufacturers are no exception.

Astronics, which sells in-seat power systems to the IFE suppliers, has revealed it isn’t shipping any product for the 787 right now and doesn’t believe it will do much work for the programme in 2011 because, as CEO Peter Gundermann noted in a recent earnings conference call, “we’ve already shipped 30 shipsets or so of product to our customers for the 787 already. We did that last year, even the year before. So we’re a little bit ahead of the curve.”

What that means for Astronics, he says, “is that when Boeing starts ramping up 787 and all of the suppliers around the world start talking about the 787 impact on their financials, we’re going to be strangely silent. That doesn’t mean we’re off the program; it just means that we’ve got to wait for that inventory that we’ve already shipped to get through the process.”

Gundermann’s comment begs the larger question – just how much IFE kit is growing dust as the 787 awaits delivery?

While declining to talk specifics, Thales – which won a lot of early 787 IFE contracts – and Panasonic in 2009 revealed their financials have been profoundly impacted by the twinjet’s repeated delays.

Indeed, the 787′s tardiness has been a major nightmare for IFE manufacturers because they don’t get paid until the aircraft are delivered. I hear there is a warehouse in Seattle full of 2-3 year old Thales equipment that has yet to be fitted to aircraft.

With the lifecycle of IFE at about 18 months (in terms of new equipment and ideas), a 3-year wait equates to nearly two turns, and means that airlines will be taking 787s with old IFE equipment.

So what should airlines do? Using the delay as leverage, airlines are likely negotiating aircraft price reductions. But might they also be able to negotiate a refresh on equipment (i.e. Boeing agrees to fund retrofits post-delivery)? This sort of agreement could be especially important for airlines that are retrofitting current fleets with the latest, highly-integrated IFE/seats on offer from both Thales and Panasonic and/or in-flight connectivity. Isn’t it logical for airlines to tell Boeing: “The rest of my aircraft are going to have the new integrated seats. Why should I accept the 787 with old seats and IFE?” 

Star Alliance carrier All Nippon Airways is scheduled to take delivery of the first 787 in the mid-first quarter of 2011. The carrier will offer Panasonic’s eX2 system, but it will be a couple generations old.

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6 Responses to Should Boeing 787 customers demand new IFE via retrofit?

  1. Dave November 8, 2010 at 5:45 pm #

    They should demanding Boeing compensate them- this whole disaster is due to their incompetence.

    Glad to see you’re not dead- for a while I was thinking you’d been eaten by zombies…

    Imagine the trouble we’d have to get someone to replace you- I mean dressing Steve up in a red wig and a skirt wouldn’t have that je nais se quoi that the real Mary brings to the table… this is of course assuming the real Mary is back and you’re not an evil clone.

  2. Mary Kirby November 9, 2010 at 5:35 pm #

    She’s baaaaack. :0)

  3. Arleen Busenbark November 10, 2010 at 4:13 am #

    How do you watch great quality lost tv shows online if you are not in america?

  4. Dave November 10, 2010 at 9:17 am #

    How do I know you’re not an evil clone or Trimble playing dress-up? We must have proof…

  5. j November 14, 2010 at 1:05 pm #

    Buy IFE stocks!
    It’s a bargain today. Their cash flow will be excellent once Boeing pays the inventory.

  6. car gps navigation| January 5, 2011 at 12:10 pm #

    Actually, NO…!! Unless yours is found by the serial number, but what are the chances…. They are one of the most stolen items from cars this year. Don’t leave your car with one in sight.!! Even with just the suction cup window mount, your car may be broken into, thinking your GPS may be under the seat, or in the glove compartment..

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