White and blue

A couple of things to reflect upon today. First, we’ve unveiled the special new livery for some of our 787 flight test airplanes.

Second, I have some thoughts about yesterday’s Boeing earnings report.

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The 5th flight test Dreamliner, ZA005, features a modified white livery with blue accents - incorporating some of the elements from the distinctive colors and visual elements seen on the first 787.

Airplane #5 rolled out of an Everett paint hangar on Monday. It bears a simplified paint scheme that you can also expect to see when we roll out airplanes 3, 4 and 6. Airplane #2 has the livery of launch customer ANA.

The simpler livery saves time and expense compared with the full Boeing livery, and will stay on these airplanes until the flight test program is completed and the airplanes are refurbished and delivered to customers.

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As you can see, ZA005’s two GEnx engines have been temporarily removed. They’ve been returned to GE for some planned minor improvements.

Now, to Boeing’s second quarter 2009 results. As is often the case, what you make of the report may depend on where you sit.

From a results perspective, it was a good quarter. Company revenue rose 1% to $17.2 billion, and earnings per share rose 22% to $1.41. On the Commercial Airplanes side, our revenues for the quarter were down 2%. That was due to slightly lower airplane deliveries and a lower volume in services.

BCA’s contractual backlog remains a healthy $257 billion and we remain on track to deliver between 480 and 485 airplanes this year, despite ongoing market pressures.

Having said that, I’m sure a number of people were anticipating - and have speculated - that we would have issued a new 787 schedule. They were probably a bit disappointed.

Simply put, we’re not ready to provide a new schedule. We’re still assessing the implications (schedule and financial) of the previously reported need to reinforce the area within the side-of-body section of the Dreamliner.

What we can say is that we’re making progress and have identified a technical solution. As we heard, from an engineering standpoint, the fix design is straightforward, involving a relatively small number of parts. We’re evaluating ways to implement it, and once we complete this assessment an aircraft modification and testing plan will follow. At that point we can assess the impact to flight test and production, with the new schedule expected later this quarter.

We also learned of some further progress in the 787 program beyond what we’ve reported here in the blog. Airplanes #3 and #4 have completed “power on.” And we’re in the process of assembling Airplane #7, the first production 787.

To close out the discussion of the 787 I want to recall the words our CEO Jim McNerney used in the investor and media call on Wednesday:

“Through all of our experience on this program to date, it’s important to remember that we are doing something here that has never been done before. The innovation and technology applied to this program is unprecedented in scope and in the impact it will have on commercial aviation. And the fundamental design of the airplane is sound.”

As we’ve said here before, these are challenging times and will remain so for some time. But we have a large backlog, and a solid foundation, with strong products and services. Boeing is doing what’s necessary within the challenges of the current economy. As Jim said, our intention is not just to survive these times, but use them as the impetus to accelerate the changes we need to better compete in the marketplace.

Comments (12)

FrankLeathley (Mill Creek, WA):

The comment re the technology leap for the 787 is similar to that taken back in 1932 in going from the welded steel fuselage framing and wooden wing framing all cloth covered to the semi-monocoque construction of the model 220 and 247 as I teel folks looking at the 787 test barrel section in the Future of Flight.

P.Sumantri (France):

I am quite disappointed Mr. McNerney didn't put an "upper bound" for the first flight. Either this is a sign of confidence that the fix could be implemented quickly or it could be interpreted as a sign of disarray.

The short term impact of this delay will be palpable. However, I think in the long term it won't be as bad as some may believe.

http: //verovenia.wordpress.com

diane wilson (Cary, NC):

I think I can put a "lower bound" on announcing the next target first-flight date. The fix will be installed on a static test aircraft, and tested, and the results analyzed, before Boeing makes another public commitment on first flight. That static test is the next real milestone.

Randy, thanks so much for your informative updates!

Norman (Long Beach, California, United States):

The simplified livery looks good, this sort of reminds me of the simplified MD-11 livery in 1990, just an MD-11 title, that's was it, the plane was bare metal silver.

Gregory Schmitz (Anchorage, AK 99504):

The sad thing is that this is a monumental bean counters screw up.

In order to convince Boeing management it actually wanted to stay in the aircraft building business, they forced this insane production method (supposedly it cut costs which we have seen is total eyewash).

The stupid part is that you do not do two major changes at the same time, the composite aircraft and mostly electric was more than enough a risk by itself.

Until Boeing is run by engineers again, and the bean counters are put in the back room where they belong, the next program will be screwed up as well.

This is not only an outstanding leap in technology, its an astonishing one, that's been terribly tarnished by management, not engineering.

The problems that have come up would not have impacted the program anywhere near to this degree if it had been done in house the way it should have been.

Johan Björklund (Stockholm, Sweden):

Interesting to see the simplified house livery. Which colors will the first 747-8 sport one wonders. It is good to know that the wing issue seems to have a feasible solution in the ways.

David Lalmalsawma (Aizawl, Mizoram, India.):

Glad to see the 787 Programme moving forward but not satisfactorily for for many people.

I congratulate Boeing on achieving powered on for four of its 787 test aircraft.

But in the the meantime also hope that Boeing utilized all of its test aircrafts to accelerate the certification problem.

Alessandro (Sweden):

To GregoryS, I think Boeing should´ve converted a
B767 a test plane for the electric system which was to be used on the B787, costly yes, but when important customers like Qatar Airways CEO Al Bakr, lose their patience with Boeing in public, it´s bad, very bad.

Dave (WA):

Thanks Randy, and Thanks JIm McNerney for pointing out that this hasn't been done before. The press, even the aerospace press community seems to have forgotten this is new ground. You're welcome Airbus.

TC (Mt. Vernon, WA):

The problem isn't the progress of the 787 program, which is excellent considering the new technology. The problem was the failure to develop a realistic and precise schedule. The schedule is now in error by over 50%, which is pretty lame coming from a company whose stock and trade is precision in metrics.

Paulo M (Johannesburg, RSA):

I'm leaning more on the idea that the hardship thus far on the 787 has been mostly the result of this company's mismanagement, however, as Dave in Washington says here - this is totally new ground, at least on the scale and complexity anyway.

The 787 was conceived at a period in time when this industry had largely written-off Boeing's continued large-scale legendary presence at the forefront of innovation and as a major player. Since the 7E7's launch, as it was then known, Boeing has also successfully implemented admirable improvements and new additions to its main lines, all of which are in a strong position today. So, it must be that it is managing fine.

Boeing has on the 787 pushed the technological boundary very far to create a new standard in the industry, as it has time and time again. It's a beautiful, remarkable achievement. And, though the 787 has many, many superb international partners, that achievement is still uniquely an American one.

The financials are strong and solid; there are many incredibles at Boeing yet.

Ron Kirker (Richardson, Texas):

Everyone seems so concerned with the schedule. While schedule is important, getting it right is more important. Taking the extra time to make absolutely sure that the fix will really work long term is what makes Boeing the best manufacturer of commercial aircraft. This is why I feel comfortable on a Boeing and only on a Boeing!

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