Boeing's chief executive today stood by the 2005 decision to install lithium-ion batteries on the Boeing 787 and pledged to keep production ramp-ups and three planned aircraft development programmes on track despite the uncertain timing of the twin-jet's return to flight.
"Nothing we've learned has told us yet that we have made the wrong choice on the battery technology," says Boeing CEO Jim McNerney.
Speaking to analysts and reporters 3h after Boeing reported 2012 earnings, McNerney effected a "business-as-usual" posture and tone even as the company and federal investigators scramble to understand the reasons for the battery failures that have grounded the 787 fleet for two weeks.
Although "good progress is being made" in the search for a root cause, McNerney and chief financial officer Greg Smith could not provide any clues or promising leads in the battery investigation, nor offer any guidance on the timing or cost of the process for returning the 787 to operational service. While the root cause remains a mystery, Boeing's official financial guidance for 2013 assumes that the 787 grounding will have no impact on earnings.
At the same time, McNerney seeks to defuse any concerns that the indefinite 787 grounding and suspension of deliveries could have a spill-over effect on the company's growth plans for Boeing Commercial Airplanes (BCA) in 2013.
"This is a highly compartmentalised issue," McNerney says. "Because of the specialised nature of the technology and of the investigation, it's not drawing from any critical resources on any other growth programmes we've got."
Boeing's engineering staff already bears a heavy load. In addition to supporting several over-lapping battery and electrical system investigations and reviews on the 787, BCA also is in the process of stepping up production levels on the 737NG and 787 lines this year.
Meanwhile, Boeing plans also to launch the first 787-9 into final assembly and freeze the configuration of the 737 Max in the first half of the year. Formal launch of the 787-10 also is likely sometime this year, and Boeing is continuing to refine the business case for the re-engined, re-winged and updated 777X.
With all of this engineering activity, Boeing is not aiming for an aggressive delivery rate on the 787, assuming the US Federal Aviation Administration allows the manufacturer to lift the suspension on deliveries.
The Flightglobal Ascend database had projected 70 787 deliveries in 2013, but Boeing's latest guidance says only there will be more than 60. McNerney clarified that the company does not expect the final number to be significantly higher than that amount.
"The rate where we are today at about 60 is our plan and I think it's prudent considering where we are," McNerney says.
That means Boeing expects to deliver 787s at a rate of five per month for the full year, a comparatively slight increase over the 3.83 monthly average achieved in 2012.
A key reason for the slow-down in the growth of the delivery rate in 2013 is the mix of 787s being inducted into Boeing's change incorporation line, says Greg Smith, Boeing's chief financial officer. In addition to active assembly lines in Charleston, South Carolina and Everett, Washington, Boeing also has established a line to incorporate engineering changes in 787s assembled during the extended flight test phase.
Last year, 32 of 46 787s were delivered to airlines from the change incorporation line. In 2013, Boeing plans instead to deliver about nine aircraft off the same line. These are mainly the earliest aircraft assembled on the production line, and therefore require the most amount of changes, Smith says.
Another factor slowing the rate of 787 deliveries this year is the induction of the first few 787-9 models, he adds. The first of the 290-seat stretch models incorporates several structural changes, and will require longer span times on the production flow.
The extra duration allowed for the 787-9, however, will not stop Boeing from increasing monthly output from all three 787 production lines to 10 aircraft by the end of the year, Smith says.
At that point, Boeing will be producing 787s at twice the rate that it is delivering the aircraft to customers. The gap is not expected to narrow until the 787 lines stabilise at the 10 per month level in 2014, Boeing tells Flightglobal in a follow-up email.