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Boeing trims vacated 787 delivery slots to reduce risk

Boeing has trimmed the pace of future 787 deliveries to reduce the risk of over-burdening the production system as it executes a swift and critical ramp-up.

Ray Conner, president of Boeing Commercial Aircraft, also is reviewing plans to ramp up to two 747-8 deliveries per month, and taking a less strident approach than his predecessor on speeding up delivery rates.

But Conner remains "cautiously optimistic" that the company's across-the-board production increases can still be executed. The ramp-up is the basis for the company's guidance for revenue and profitability.

"If we hit these ramp rates we're going to do very well, and we're going to hit them," Conner said at a Morgan Stanley conference on 14 September.

Qantas Airways' decision on 23 August to cancel delivery slots for 35 787-9s created rare vacancies on Boeing's production skyline, but the airframer has chosen not to accept requests for those slots from other customers.

"I've been getting calls all the time to get those positions," Conner says. But "we're using that as an opportunity to de-risk our rate ramp," he added.

Making Boeing's task more of a challenge is the company's schedule to introduce the 787-9 variant in 2014, he said.

By the end of 2013, Boeing plans to deliver 10 787s per month from three assembly lines and the engineering modification centre, or twice the output today. Only 3.5 787s were delivered per month less than a year ago.

Over the same period, Boeing also is increasing monthly output on the 777 from seven to 8.3, and the 737 from 35 to 42. Jim Albaugh, Conner's predecessor, indicated in May that he wanted to push output even faster, complaining that a seven-year order backlog is "too much".

Conner, however, declined an invitation by a Morgan Stanley aerospace analyst to echo Albaugh's philosophy. Instead, Conner spoke of maintaining rates for the 737 at 42 per month and for the 777 at 8.3 per month at least for a certain period.

But Conner seemed less optimistic about prospects for maintaining plans to grow the 747-8 output to two per month.

"The cargo market has flattened," he said.

But he added that high fuel costs are driving cargo carriers to park less-efficient freighters, and continue taking delivery of 777Fs and 747-8Fs.

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