October 2009 Archives

Second line

On Wednesday Boeing approved the choice of North Charleston, South Carolina for a second final assembly line for the 787 Dreamliner. Boeing Charleston will serve as a final assembly location, as well as supporting the testing and delivery of the airplanes.

The second 787 assembly line will do a couple of things. It will expand our production capability and diversify our manufacturing base. We think ultimately this will reduce costs on the program, and that’s important for maintaining our competitiveness.

You can read some of the details of the announcement in our news release.

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Boeing Charleston will be the site of the 2nd 787 final assembly line.

I think one of the first things I should reiterate here, as Jim Albaugh, president and CEO of Boeing Commercial Airplanes, emphasized to employees, is that we remain committed to Puget Sound.

Even though we’re expanding at Boeing Charleston, the Pacific Northwest remains the headquarters for BCA, and Everett will continue to design and produce airplanes, including the Dreamliner. As Jim put it, “there is tremendous opportunity for our current and future products here.”

Something very important to point out: we’re adding jobs in South Carolina, not taking them away from Puget Sound. Again, as we heard today, the Puget Sound area, where Boeing began, is and will continue to be our center for design, flight test and manufacturing.

One other note, until Charleston’s second 787 line is underway, we’ll establish a transitional “surge” capability in Everett. This is to make sure we have a successful introduction of the 787-9, as well as ensure a smooth ramp-up to 10 deliveries per month between the two sites. When the Charleston line is up and running we’ll phase out the Everett surge capability.

The process will take about 2 years. Our goal is to have the second line up and operational in July 2011, with a first airplane delivery from Charleston in the first quarter of 2012.

We will have the processes in place to effectively manage 787 airplane quality while operating 2 final assembly sites.

Finally, I want to point out that before we made this decision, we looked at a number of factors, including the business environment, logistics and infrastructure that exist at both company locations. We applied the same basic assumptions and ground rules to both sites, with a heavy emphasis on long-term competitiveness and ensuring a sustainable stream of deliveries for our customers.

And that’s the bottom line, staying competitive, diversifying our manufacturing base and cost effectively delivering to our customers the 787 Dreamliner, an outstanding airplane with unprecedented market demand that as Jim said, sets “the standard for commercial aviation in the second century of flight.”

Slow recovery, long-term growth

SYDNEY - I’ve been on the “road” again in Asia and the Pacific region. I’m in Australia at the moment, where we’ve had an opportunity to talk about Boeing’s outlook for the region we call Oceania - Australia, New Zealand, and the South Pacific Islands.

Later this week I’m off to Melbourne and then to Wellington and Auckland, New Zealand.

Meantime, we’ve had some good media coverage of our forecast, which indicates that the economic downturn has reached bottom. It’s going to be a long, slow process to recovery, but we’ve seen that the economy in this region has fared a bit better than the rest of the world.

Results and progress

Any time you’re reporting a net loss for the quarter, you’re having a tough time. Clearly the bottom line about Boeing’s 3rd quarter was that our bottom line wasn’t good.

You can read the full earnings news release on our Boeing Mediaroom site.

But there’s another significant part of the story that I’d like to stress. And that is, despite our setbacks, we’re making good progress on our Commercial Airplanes development programs.

Our new BCA leader, Jim Albaugh, told employees today that our teams are working through the challenges. And although it’s not going to be easy (and obviously has not been easy thus far), we’re working to get the 787 Dreamliner and 747-8 into the air, successfully flight tested, and delivered to our customers as soon as possible.

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Progress in Everett: The 747 program completed ground vibration testing on Monday for the 747-8 Freighter, one of the critical milestones leading up to first flight. The first 747-8 Freighter will be “factory complete” and ready to roll to the paint hangar in the next few weeks.

Let’s talk a bit about the 787. In the 3rd quarter we made some significant steps to deliver on our promises. We announced a new program schedule in August, and we’re performing to that schedule. Installations of the fittings on the static-test airplane and the six flight-test airplanes are going well. Next up, after installation on the full-scale static test airframe is complete, we’ll re-test the modification on that airplane.

Then, after successfully completing that test and being cleared for flight, we’ll re-do some of the gauntlet and taxi testing on airplane #1. After that, we’ll fly. We still expect that to happen by the end of the year, with first delivery scheduled for the fourth quarter of 2010.

By the way, assembly has begun on Airplane #11 (which is the 5th production airplane) and with this airplane we’re already seeing the results of the continuous improvement with each successive airplane down the line. Components for Airplane #12 are beginning to arrive in Everett, and despite the issues we’ve had, the 787 team, including our supplier partners, is progressing toward establishing full-rate production.

Of course there’s a lot of work left to do, including development of the 787-9, but it’s important to stop and take note of how far we’ve come.

As Jim Albaugh noted, “Designing and building an airplane that will change the way people experience air travel and revolutionize the industry is a world-class challenge. At Boeing, we always do the hard things. I have great confidence in the 787 team and in the men and women from around the entire company who are supporting the team every day.”

We also provided information about the 747-8 today. The first freighter is more than 90% assembled, and its engines have been hung, and the second is more than 80% complete. We’ve achieved “power on” for both airplanes. We’re applying the lessons we’ve learned during the assembly of Airplane #1 to our work on Airplane #3. In fact, the initial join and integration has improved noticeably with Airplane #3, and it is now about 75% complete.

We expect to fly the first 747-8 Freighter by early next year, with first delivery in the 4th quarter of 2010. We’re also making good progress on the 747-8 Intercontinental - the passenger model – which has now surpassed 75% design release and has completed critical design review.

You’ve heard us say before that we have to do better on our development programs. We have confidence that we will. We’re optimistic that sooner rather than later, we’ll get the 787 and 747-8 through their flight test programs and delivered to our customers.

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The 737 moving line in Renton: Our established airplane programs enjoyed a solid 3rd quarter.

I think that at the core, our business is performing well. We had good news this past quarter on our established 737, 767 and 777 airplane programs and in our Commercial Aviation Services areas. We delivered 113 airplanes during the quarter, including 52 in September, the most deliveries in a single month since November 2001.

We don’t talk often enough about our Services business, so I should mention a few successes here. In the past quarter we supported Air China, on a fix to 747 cargo nose door, and delivered a second 747-400 Boeing Converted Freighter (BCF) to Air China Cargo. In addition, Boeing Airplane Health Management added Air China and FedEx as customers in the quarter, bringing to 34 the number of global customers for this service on more than 800 airplanes.

So, looking ahead, there’s a lot to do in the 4th quarter and beyond. It remains a challenging time. No surprise there. As 2009 turns to 2010 we’ll be focused, as always on executing on our development programs and operating at the highest levels of quality.

We’re determined to grow and improve – to emerge from the current market challenges as a stronger company that offers the right products market-leading support our customers expect of us.

That’s our goal. That’s what keeps us moving forward.

Rumours

You’ve probably seen or heard some reports over the past couple of days implying that we’ve had to get “back to the drawing board” on the 787 modifications.

Don’t believe it.

As 787 vice president and general manager Scott Fancher told employees on Friday, the reports that we’ve had to somehow redesign part of the side-of-body modification solution are “off base.”

On the contrary, the design of the side-of-body solution is on track, Scott said. Installations of the fittings are proceeding well and the program is pleased with the progress.

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ZA002 inside the temporary structure on the Everett Flight Line where it’s undergoing the side-of-body modification.

In addition, and also in contrast to what you may have read, we remain on track to fly the Dreamliner by the end of the year.

We’ve talked here before about the proliferation of Web sites and blogs that often peddle supposed breaking news from “sources.” And once again, while there are many industry writers, journalists, and analysts who provide valuable contributions, the challenge is always going to be distinguishing rumor from fact, authoritative from hearsay.

As we’ve pointed out, Boeing will communicate to the public in order to provide updates and definitive explanations of what we’re doing. For example, we expect to provide more context around the side-of-body fix during our earnings report on October 21st.

Until then, I would suggest using a critical eye when consuming second hand news.

Testing 1, 2, 3

Imagine this. Two new high profile airplanes in flight test at the same time. 9 or 10 airplanes involved. Yes, that would be a sight to see.

Actually you don’t have to imagine it. We did see something similar when we flight tested both the 757 and 767 at the same time back in 1982. I remember it vividly. I recall how quiet the 757 was in flight, and how we sent the 767 on an international demonstration flight that year.

Well, get ready for simultaneous flight tests once more. If you’ve been following the development of the 747-8 and 787 Dreamliner, you realize that their flight test programs are converging, and we’ll soon have both under way.

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The last time major flight test programs overlapped - 757 and 767 - between February and July 1982.

One notable difference this time around is that we’ll be doing simultaneous flight tests with two widebody airplanes. So, with the overlap in the 747-8 and 787 flight test programs there’s isn’t the room to perform both at once from our Puget Sound field locations. But we’ve worked out a good plan with the Boeing Test and Evaluation team to make the most efficient use of our resources, while accommodating the test, certification and delivery schedules for both the 747-8 Freighter and the 787 Dreamliner.

We took a look at several ideas and concluded that the way to do this is to take advantage not only of the traditional resources in the Seattle area, but also other locations.

So, the 787 Dreamliner flight test program will be based at Boeing Field while the flight testing for airplanes 1, 2, and 3 for the 747-8 program will be conducted at “remote” sites.

The plan calls for operating the 747-8 Initial Airworthiness testing out of Moses Lake, in central Washington state where there’s a large airfield often used for testing and training. We can also perform limited testing on two of the three 747-8 test airplanes at Boeing Field during this time without impacting the ramp-up of the 787 test fleet.

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The 3 flight test 747-8 Freighters are nearing completion in final assembly.

After Initial Airworthiness is achieved on the 747-8, the remainder of the flight test program for that airplane will move to another large airfield, in Palmdale, in Southern California. We’ll deploy Puget Sound test and program personnel to Palmdale to support the operations there.

Clearly, coordinating and completing the multiple flight testing activities for 9 airplanes - six 787 Dreamliner flight test airplanes and three 747-8 flight test airplanes – will require the use of remote locations. This also provides us the unique conditions we need for certain key tests such as hot or cold temperatures, calm weather, and high wind conditions.

We think that about 50% of the total flight test program hours - for both the 787 and 747-8 Freighter - will take place at a variety of remote locations that have these unique conditions.

This is a big challenge. But as I mentioned, we’ve done simultaneous flight test programs before, and we don’t see it impacting schedules. This plan - including moving the 747-8 Freighter to remote locations - will allow us to accommodate the schedule and resource requirements of both programs.

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The Ground Vibration Test (GVT) is underway in the factory in the run-up to 747-8 flight test. GVT simulates vibrations and responses the airplane will experience in the air and helps clear the way for high speed flight testing.

All of the technical details aside, for those of us who love aviation, the next several months are truly going to be exciting and historic times for Boeing and our industry as the world’s two newest commercial airplanes take to the skies for the first time.

Going Dutch

KLM Royal Dutch Airlines is celebrating its 90th anniversary this week.

It occurs to me that Boeing and KLM got their starts at nearly the same time – and although we haven’t worked together for quite all of those 90 years, we do have a very long and successful relationship.

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A new 777 for KLM, which turned 90 this week.

The relationship with our Dutch customer began back in 1934, when Boeing legacy company Douglas made its first sale in the Netherlands: a 1934 DC-2.

Soon to follow were numerous MD-11s, 737s and 747s in all configurations. KLM was the launch customer of the 747-200 as well as the Electronic Flight Bag. Their latest delivery, KLM’s fourth 777-300ER, took place just this past August.

What’s the “secret formula” that keeps two partners working together for more than 70 years? A shared vision? The same corporate DNA?

In the case of KLM, probably all of the above. Like Boeing, KLM is a true aviation pioneer, with an international focus - positioned at the forefront of innovation and environmental issues. We’ve been able to bridge decades of the rapid changes and challenges that characterize our business. Boeing’s capable product lineup has delivered a lot of added value to KLM over the years and continues to do so today. You might say we’ve led the way together.

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But KLM is more than just a “customer.” I think “partner” is really the word. We’ve been partners in innovation, environmental care and in creating economic growth. I also think KLM stands for more than just an airline in the Netherlands - it’s a national symbol of economic and industrial achievement.

Likewise Boeing’s activities in the Netherlands encompass more than just our partnership with commercial airlines such as KLM, Transavia.com and Martinair.

Another important element in Boeing’s partnership with the Netherlands is the long cooperation with leading Dutch universities such as Technical University in Delft. In addition, Boeing’s activities provide work to skilled professionals of more than 80 Dutch companies, including the 2004 Boeing Supplier of the Year, Stork Aerospace. Boeing and Stork recently teamed up with Royal Ten Cate and one of the country’s leading tech institutes, Twente University of Technology, to form the Thermoplastic Composites Research Center.

Also this year, Boeing pledged its support to the Netherlands’ World Class Aviation Academy, an initiative that is based on the World Class Maintenance program in which the aviation industry and the Dutch government joined forces to create a center of excellence in maintenance.

The Netherlands is a country with a proven history of successful entrepreneurship, an international orientation and a know-how in advanced composites. I guess it’s fair to say that for Boeing, “going Dutch” just feels right.

So, congratulations to KLM Royal Dutch Airlines on their 90th anniversary. Here’s to the next 90, together.

It don't come easy

On Tuesday Boeing announced a revised schedule for the 747-8 Freighter. At the same time we announced a $1 billion pre-tax charge resulting from production and market challenges facing the program.

Unfortunately, the 747-8 has required more significant rework than we anticipated, due primarily to late maturity of engineering designs. While we’ve struggled with the disruptions that this caused for the program, we believe we’re now on the right course.

As you saw in our announcement, we now expect first flight of the 747-8 Freighter to take place early next year rather than at the end of this year.

First delivery of the 747-8 will be in the fourth quarter of 2010. First delivery of the passenger version remains planned for the fourth quarter of 2011.

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The first 747-8 Freighter is now more than 90% assembled.

In calculating the charge, we coupled our manufacturing issues with the near-term decline in freighter demand caused by the global economic downturn. So, in light of this environment, we’ll be postponing for about two years our planned 747 production rate increase from 1.5 to 2 airplanes per month.

We’re flying through tough skies right now, but I want to emphasize that we do fully expect this market to recover as global trade and economic conditions improve. That’s why we remain confident in the 747-8’s prospects.

The 747-8 is a very competitive airplane with a strong future and a significant market niche. We’re making progress. The first freighter is more than 90% assembled, and power-on has been achieved. The remaining work is mostly in systems functional tests.

Right behind that airplane, the second 747-8 Freighter is more than 80% complete and has also completed the power-on milestone. The third airplane is 75% assembled.

Overall, eight 747-8 Freighters are in various stages of assembly. On the passenger version, known as the Intercontinental, 75% of the engineering is released.

I’ve mentioned here many times that new airplane development is inherently difficult, even on an airplane we know well. But clearly, so far our performance has been unacceptable.

It’s important that we get our airplanes built and that we deliver the products that enable our customers to succeed. It hasn’t come easy, by any means, but sooner rather than later, we’ll be talking about first flights, first deliveries, entries into service, and the exceptional operational performance of Boeing’s newest airplanes.

 

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