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Boeing commits to next production-rate increase for 787

Boeing will build 14 787s per month – or 168 per year – starting in 2019, said Boeing chief executive, chairman and president Dennis Muilenburg on 13 September.

"Based on the existing campaigns... we're confirming now that we're going to 14-a-month production rate in 2019," Muilenburg said at the Morgan Stanley Industrials conference.

The rate increase would expand on the fastest production rate for a widebody, which the 787 has already set at 12 per month, using assembly lines split between Everett, Washington, and North Charleston, South Carolina.

"We're very confident that we can do that, again, with this sustained view in mind, keeping long-term supply and demand in balance and a healthy production system that will support that," Muilenburg says.

In the past, Boeing executives talked of accelerating even faster. In a roll-out ceremony in July 2007, Boeing executives considered delivering as many as 16 787s per month from a single line in Everett.

But then reality set in. As the 787's design and production problems became realised in 2008 and 2009, Boeing's production ramp-up slowed to a peak of 12 per month. Starting in 2014, however, Boeing executives pointed to the possibility of accelerating deliveries even faster, in part to gain production efficiencies that would help offset a staggering $28 billion in deferred production costs accumulated through 2015.

Boeing now expects to add 100 aircraft to the current accounting block of 1,300 for the 787 programme at the end of the third quarter, Muilenburg says. As the accounting block increases, the pressure on breaking even at the programme level for the 787 is further reduced.

"This is an important step for us, going to 14 a month... [It] is a great signpost that the strength and value that that airplane is delivering to our customers," Muilenburg says.

The 787 line is more profitable as the production rate grows, but some analysts have questioned whether Boeing can sustain a production rate of 14 per month long enough to make the stress on the supply chain worth it.

However, Muilenburg argues that demand for the 787 is growing. By the end of August, Boeing had orders for 689 of the long-range twin-aisles in the backlog. Demand also appears to be growing for the 787. After hitting a low of 42 orders in 2014, Boeing won orders for 99 787s in 2015 and 80 more in 2016. So far, this year, Boeing has sold another 82 787s, with 3.5 months left to go.

"We see a significant widebody replacement wave coming in early in the next decade as we have a number of widebodies globally that are going to hit the 25-year-point," Muilenburg says. "Much of that demand will also be satisfied with 787s."

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