Boeing eyes new rate increase in tandem with 787-10X launch

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Another production rate increase may be necessary to launch the double-stretch 787-10X later this year, Boeing chief executive Jim McNerney said in a teleconference with analysts on 24 April.

As the proposed 320-seat version of the 787-10X nears a formal launch, Cowen & Co. analyst Cai von Rumohr asked McNerney on the earnings call how Boeing could offer delivery slots for a new 787 variant without stepping up the monthly production rate to at least 12 aircraft per month.

"You're asking the right question," McNerney replied. "We'll have to sort through that. If it did require taking up [the production] rate, that would add more time to it."

Boeing still has 850 unfilled orders combined for the 250-seat 787-8 and 290-seat 787-9. The production rate is scheduled to double to 10 per month by the end of the year. But delivery slots remain sold out even at the higher rate for several years. That means the only way to deliver significant numbers of 787-10s before 2017 would be to increase the rate even higher than 10 per month.

Boeing officials once in mid-2007 discussed increasing the 787 production rate to 16 aircraft per month, just before supply chain breakdowns and design problems caused a series of certification delays.

Six years later, however, company officials are likely aiming at a lower rate of growth on the 787 programme, but they clearly see an opportunity to increase output.

"Is there demand beyond [10 per month]," McNerney asks, "There are many that think there is."

McNerney says there is "more room" for production rate growth on the 787 and 777 programmes, which is already stabilizing at a higher rate of 8.3 per month or 100 per year.

"One thing we don't lack for with the -10X is demand," McNerney says. "Customers want this airplane."

Bolstering the company's confidence on the 787 programme is the improving maturity of a once glitch-plagued production system. The per-unit cost to build each 787 has declined by 60% from line number eight to 100, says Boeing chief financial officer Greg Hayes.

McNerney acknowledges this rate of improvement is slower overall than Boeing experienced on the 777 programme, but that was because the earliest 787s required significantly more work.

Boeing still expects to start making a profit on each 787 in about two years and to break even after delivering about 1,100 aircraft.