July 2010 Archives

Innovation generation

Back in January, we had a great response to a couple of blogs pointing to our new “Design Highlights” interactive sites on newairplane.com - for the 787 Dreamliner, and the 747-8.

We’ve just launched a similar feature focused on the Next-Generation 737.

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To view the Next-Generation 737 Design Highlights site you can click on either image above.

I think you’ll find these pages do an excellent job of telling the story of the continuous innovation that goes into the Next-Generation 737 - the advanced technology, proven performance and productivity, the enhanced passenger experience and environmentally progressive features that make this a best-selling commercial airplane.

I’d be curious to know what you think.

Q2 2010 results

It’s earnings season again, and today Boeing has reported on a solid 2nd quarter.

Our news release:

Boeing Reports Second-Quarter Results

Werewolves of London

LONDON - If you’re at all familiar with the song title above, you’ll understand when I say, at the end of a long week at Farnborough, my hair is far from perfect, and there’s scant time for kicking back at Trader Vic’s!

Let’s just say that as twilight falls over this air show, our whole team is feeling a bit scruffy and ragged around the edges. It’s been a great show in so many ways, and yet it’s an exhausting marathon.

I mentioned the other day about the rinse and dry cycle as you go in and out of hot and cool rooms at the show. My head hurts, my feet hurt. I can use a shower and a shave, frankly.

Speaking of showers, we saw some threatening skies on Thursday. Big thunderstorms, which actually delayed the flying displays for about an hour and a half.

I did manage to have a bit of fun during the day - took a walk along chalet row and in the exhibit halls. What I found was that even though the 787 departed here on Tuesday, it never really left.

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I stopped at the Spirit Aerosystems exhibit during a kind of “world tour” of 787 Dreamliner partners at the air show. We shot a video in the process that you can view by clicking on the image above.

As I visited the exhibits of our suppliers and partners in Russia, Canada, Kansas, Ohio, the U.K, France, Korea, Japan, etc., I discovered components of the Dreamliner that they provide being highlighted all around the show.

Made me realize that although the 787 technically made its international debut here this week, it has been truly a global airplane all along.

By the way, when the 787 flew away, Qatar rolled in a 777-300ER for static display. The airplane was spectacular and the team at Qatar - from the flight engineers to their public relations people to the flight attendants - were fabulous to work with.

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Jim Albaugh posted a video message to Boeing employees from inside the Qatar 777-300ER. You can click above to watch the video.

From the media, I got question after question about Bombardier, and the lack of orders for the CSeries.

For Boeing (and Airbus) a lot was made of our order activity, both here and back in Seattle, and clearly we were pleased that our customers wanted to make announcements.

The big story, as I mentioned early in the week, has to be the recovery in the market, and the leasing companies really stepping up in a big way and filling their cupboards with airplanes, so to speak.

As I close out Farnborough 2010, I just have to mention once more what a thrill it was to see ZA003 here on the flight line.

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The star of our show: the 787 Dreamliner.

The 787 was the highlight by all accounts, threatening to eclipse everything else at the show. Everyone I met said so.

I mentioned to an Airbus colleague that now I understand how they must have felt when the A380 made its first air show appearance.

So as I wrap up my week, perhaps walking the streets of Soho in the rain, I have to say it’s been a great experience, one that I’ll remember for a long time.

But I do look forward to that shower and shave.

Tuesday afternoon

FARNBOROUGH - Another long and very dynamic day, during which - to some observers - we saved the best for last.

Truly a highlight of the entire show took place Tuesday afternoon - 4:41 pm local time by my watch - when the 787 Dreamliner departed the airfield and treated the crowd to a brief flyover.

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A breathtaking farewell flyover from ZA003 accompanied by a pair of WWII-era Spitfires.

When the 787 took off, yes you could hear it, but I can’t emphasize enough just how quiet it is. The noise seemed to just fade away as it flew off into the clouds for its journey back to Seattle.

The Spitfires flying in formation? With their piston engines they actually seemed louder than the Dreamliner’s jets. Look and listen for yourself.

If you’ve ever been to an air show you know that the traffic getting into and out of the show grounds is always endless. But that has nothing on the mad rush to grab one of the last opportunities to tour the Dreamliner.

Let me just tell you the final half hour or so before we buttoned up the airplane for its return home was quite frenzied!

Beyond the magic of the Dreamliner’s departure, it was another typical - read, hectic - day. I spent some more time on ZA003 earlier in the day, and I also bumped into my counterpart at Airbus, Andy Shankland. We had a friendly chat.

Also had a lot of interaction again with journalists. Did some broadcast interviews in the mix as well. At one point I think I managed to steal a moment somewhere to sit down for some quiet time. At least I think I did.

By the way, a number of journalists came up to me to say they keep up with Randy’s Journal. Got a lot of comments about our recent post around the “orders race.” Always good to get that feedback and stir up some discussion.

Speaking of which, we did have a little more customer announcement activity today.

Royal Jordanian signed an order for additional 787 Dreamliners. And we had announcements from two brand new airplane leasing ventures.

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A big week for lessors, as anticipated, with two “new kids” on the leasing block announcing - Avolon and Air Lease Corporation.

Avolon, a Dublin-based company, is launching a new business with a dozen Next-Generation 737s.

And Air Lease Corporation, led by Steven Udvar-Hazy, kicked off with an agreement to purchase up to 60 airplanes.

During the day I also enjoyed a briefing at the Canadian chalet where I spoke with an assortment of about 25 aviation leaders, suppliers, and Canadian government and trade officials. Boeing has more than 1,500 employees in Canada, and we’ve had a long and successful partnership.

In between all of my other commitments, I got to meet with a couple of dozen investors and analysts. Those sessions are always lively and informative for both sides.

I should also mention that in the morning Boeing held an interesting panel session for the media - billed as a 787 Dreamliner overview.

We had a number of Boeing Commercial Airplanes executives (representing more than 100 years of experience) up on stage to provide their insights into how the program got started and where we stand.

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From left, Scott Fancher, V.P. and general manager, 787 program, led the discussion with John Roundhill, former V.P. of Product Development; Marlin Dailey, V.P. of Sales; Mike Sinnett, 787 V.P and chief project engineer; and Mike Carriker, chief pilot of the 787 for Boeing Test & Evaluation.

The bottom line coming out of that discussion is that today the 787 is real. It’s the airplane that we’ve been talking about.

As our vice president of Sales, Marlin Dailey, put it: “Every 787 delivered will give airlines an airplane that makes a strong difference in their fleets. In this segment of the market, there is no airplane in service today or on the drawing boards for the future that comes anywhere close to the efficiency of the 787 Dreamliner.”

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Another view of the Dreamliner’s flyaway.

I hope that for the lucky relative few who got to see and literally touch the 787 here at Farnborough this week, the experience solidified in their minds that the airplane is indeed real and is indeed going to change our industry forever ..

.. starting with an amazing Tuesday afternoon here in July.

Opportunities

FARNBOROUGH - Already one day in, and you can see a huge difference between this air show and Paris in 2009.

We’ve seen a lot of order activity vs. virtually none last year, combined with - if this is possible - even more intense interest in our press briefings.

Of course, the 787 Dreamliner here on static display continues to be, as Aviation Week’s Show News put it on Monday, the “star of the show.”

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ZA003 on static display here at Farnborough. As one journalist described it to me, the 787 looks “green and keen.”

Yes, at times it seems like it’s all 787, all the time here. We’ve seen a big focus on the Dreamliner in all the air show daily publications as well as the Financial Times, the U.K. press and the news wires.

We started the show with the quiet bang of the Dreamliner’s arrival and it hasn’t let up since. And like Sunday, we hosted guests at the airplane - media, investors and customers. Lots of customers.

I wanted to give you a chance to see what they’re all seeing, so I made a short video inside the Dreamliner here at the show. Take a look:

A good part of my Monday took place once again in the airplane. I’d say I personally saw hundreds of people in three hours or so inside the Dreamliner.

I’m struck by the fact that even though it’s clearly a flight test interior, people are just drawn to the big windows - like nothing they’ve ever seen before on an airplane.

I’m expecting more of the same intense interest in the 787 on Tuesday, the last day of the Dreamliner’s stay here.

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The 787 Dreamliner is parked just down the hill from the Boeing chalet.

We started the day with a major press briefing with Commercial Airplanes CEO Jim Albaugh. The headlines coming out of that, I think, focus on our belief that despite some remaining economic uncertainty, we see the market rebounding. Albaugh told reporters we’re going to work hard to stay ahead of our competition and that Boeing is “positioned to regain - and retain - leadership” in our industry.

Albaugh also touched on product development and said that Boeing will set a strategic direction within a few months on further developing the 737 and new airplane designs.

After the briefing, we saw a number of customer announcements, those market “opportunities” alluded to in our title.

The flurry of activity around the Boeing chalet and the media center started with a big announcement from Emirates for 30 777-300ERs.

Here’s a scene from the signing with Emirates:

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Seated (l to r): Jim Albaugh; His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive of Emirates Airline and Group; CEO of GE Engines, David Joyce. Standing (l to r) Marlin Dailey, BCA Vice President, Sales; His Highness Sheikh Mohammed bin Rashid Al Maktoum, Prime Minister and Vice President, United Arab Emirates and Ruler of Dubai.

We also received a strong re-commitment to the Next-Generation 737 from GE Capital Aviation Services, with an order for 40 airplanes. Lessors are expected to return to the market in a big way this year.

And a Norwegian Air Shuttle order continues that carrier’s expansion in Europe - which makes sense considering what our market outlook forecasts for the role LCCs will play in the resiliency and strength of the market.

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GECAS announced an order for 737-800s at the show.

Finally, tonight in London I attended the premier of the IMAX film, Legends of Flight - 400+ people at the reception and screening.

All I can say before concluding this night is that this is definitely an “air show,” in every sense of that phrase. We have some great static and aerial displays. The Super Hornet roared overhead on Monday. That’s always a thrill to experience. EADS/Airbus flew the A400M - and the A380 of course.

And yes, it wouldn’t be an air show without the perspiration factor.

It was 80 or 85 degrees Fahrenheit on the field during the day (27 or so Celsius). In some rooms or buildings the air conditioning worked. In others, well .. not so much. So, you go through several wet and dry cycles throughout the day!

Here’s to hotel dry cleaning services - and I’ll see you on Tuesday.

Dreamliner at Farnborough

FARNBOROUGH - Quiet. It’s not a word you typically use to describe the scene at a major international air show.

But that was the word, as we kicked things off at Farnborough. By quiet, I mean that was my impression of the 787 Dreamliner as it approached and touched down at Farnborough Airport Sunday morning just after 9:00.

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ZA003 on approach to Farnborough ..

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.. and touchdown!

People who gathered here to witness the landing could not believe how the airplane sounded. Whisper quiet, in my opinion.

And then the noise began - as the international stage welcomed the 787. It’s the first overseas journey for the Dreamliner, having flown nonstop from Seattle.

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The 787 Dreamliner ZA003 at the Farnborough International Airshow.

ZA003 is the flight test Dreamliner that has a partial passenger interior with some economy style seating and some functioning interior items such as electronically dimmable windows.

We gave tours to media and VIP guests Sunday and I think it’s fair to say our visitors couldn’t get over the size of the windows, the new bins and other Dreamliner innovations.

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Captains Mike Bryan (from left) and Ted Grady join Jim Albaugh, president and CEO of Boeing Commercial Airplanes, and Jim McNerney, Boeing chairman and CEO, in welcoming dignitaries and media aboard the airplane.

I boarded the airplane at around 10:15 and didn’t get off until around 2:25. That’s more than 4 hours inside the airplane without a break. But I loved every minute of it.

From the media I got a lot of questions about 787 schedules and deliveries, naturally.

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As part of my day on ZA003 I got to meet with dignitaries from the U.S. and U.K. Here I’m chatting with U.S. Senator Thad Cochran of Mississippi.

By the way, as people visited the airplane on Sunday, and during the next two days at the show, we’re reminding them that while ZA003 is the only flight test airplane with an interior, it is still most definitely a flight test interior - not a customer configuration.

In fact, the seats we have in this airplane aren’t even available as an option to airlines - they don’t match up to our requirements for style or design. But, they do allow us to properly test the fittings and attachments. That’s true of almost all of the interior installations on this airplane.

Finally, take a look at a couple of shots of the preps before ZA003 departed Seattle:

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Over the weekend we got ZA003 ready for Farnborough - a good cleaning in preparation for its first trip abroad.

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Flight test airplanes work hard and sometimes that shows. We thought a good bath was in order.

ZA003 will leave the show on Tuesday afternoon. As I said, it is still very much a flight test airplane and has a lot of work yet to do.

About a dozen people traveled on the airplane to conduct testing during the flight and I can tell you that the flying time to Farnborough and back to Seattle will have been put to good use toward our testing requirements.

Back to the future - Part III

LONDON - Is it really possible that 1990 was 20 years ago? That’s when the above titled movie was released, closing out the popular film trilogy.

It’s a fitting way to bookend our discussion of the commercial airplanes market for the next 20 years.

In the movie they go back in time to the old American “west.” In our version, which we call the Boeing 2010 Current Market Outlook (CMO), we go west, east and all points in between to see into the future of our industry.

I just released our report here in London.

Clearly, we’ve been through a couple of very difficult years, but things are getting better and we see the industry growing again - both in terms of passenger traffic and cargo traffic. Passenger traffic declined about 2% during the worst recession in 60 years. But as we’ve said before, this industry is resilient and is already coming back strong.

So, as Doc Brown declares in BTTF Part III, “The future hasn’t been written yet - no one’s has.” But here’s what we see coming down the pike:

Current Market Outlook 2010 - 2029

  • Demand for 30,900 new commercial airplanes (passenger and freighter) valued at $3.6 trillion - a significant bump up from last year’s forecast.
  • Strength and resilience in the single-aisle market - demand for 21,000 single aisles valued at $1.6 trillion
  • Passenger traffic to grow 5.3% annually over the forecast period
  • World economies rebounding with strong demand for new and replacement airplanes
  • Increased traffic in emerging markets balancing airplane demand more evenly across the globe

We’ve been releasing our market outlook for 46 years now. It’s our analysis of both air travel and airplane demand. We happen to think it’s the most accurate and comprehensive forecast available for the commercial aviation market. Take a look at the graphic below:

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Boeing’s market outlook is in line with the realities of the market. Looking back to our 2000 - 2019 forecast, we accurately projected the demand distribution by airplane type and quantity of aircraft ordered and delivered.

As you can see above, we do tend to forecast conservatively. For example, we under-forecasted the number of single-aisles and twin-aisles while over-estimating large airplane (747, A380) and regional jet demand.

Going forward, we see the world fleet size nearly doubling by 2029. The need to replace older, less efficient airplanes accounts for 44% of the projected market for new airplanes. 13,500 airplanes will be replaced over the next 20 years. At that rate, 82% of the fleet operating in 2029 will have been delivered after 2010!

I think the headline for this year is the surging demand for single-aisles. Today, there are 11,580 single-aisle airplanes in operation. But that single-aisle fleet is forecast to more than double, reaching 25,000 airplanes by 2029

What’s happening is the continued proliferation of low-cost carriers as well as growth in emerging markets such as India, China and Southeast Asia. Boeing has already announced production rate increases on our 737 line to accommodate this demand, and we’re seeing early evidence of it in increased order activity this year.

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A visual indicator of the demand for single-aisles. Next-Generation 737s awaiting delivery at Boeing Field.

Demand will also come in the form of replacement needs as older aircraft such as the 737 Classics, A320s, and MD-80/90s are retired. We’ll see a wave of single-aisle aircraft retirements in the 2015 to 2017 time frame.

Yet, the fastest growing market will be for twin-aisles. The twin-aisle fleet will grow from 3,500 airplanes in operation today to 8,260 airplanes in 2029. In 20 years, much of the in-service fleet will be newer aircraft, such as the 787 and 777, offering more passenger comfort, improved efficiency, and better environmental performance than the airplanes they replace.

About 40% of the demand for twin-aisles will come from the Asia Pacific region. Also as you might expect, the Asia Pacific region in general shows the most robust market gains, with China leading the way.

The Middle East, where air travel is growing tremendously, is going to continue as another very strong market.

In North America and Europe, what we see is replacement demand as airlines update their fleets with newer, more efficient airplanes.

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We expect the world fleet to reach 36,300 airplanes by 2029. Regional jets will represent only 6% of the world fleet versus 16% today. Single-aisle airplanes will represent 68% versus 61% today. Twin-aisle airplanes will increase from 19% to 23%. Large airplanes will decline from 4% to 3%.

Worldwide we see that airlines are going to be responding to passengers’ preference for more flight choices, lower fares and direct access to a wider range of destinations. That means more flights using more efficient airplanes.

This is why we continue to see a small market for large airplanes (747 and larger) - just 720 aircraft over the 20-year period. It’s still an important segment, but largely (no pun intended) for replacement of existing airplanes, not additional growth.

A quick note about freighters. We see an increase in the world freighter fleet from the current 1,750 airplanes to 2,980 airplanes - an increase of more than two-thirds at the end of the forecast period. This will require 2,490 freighters - 740 new-production freighters and 1,750 airplanes converted from passenger models.

High freight traffic growth levels in 2010, following the recession is driving our cargo forecast upward. But fundamentals will drive the growth - speed and reliability, consumer product innovation and global industrial interdependence.

So, that’s a lot to digest, but there’s plenty more in our report. We’ve transitioned to a Web-based Current Market Outlook report with a detailed forecast database that allows you to select just the data or regions you’re interested and then download the data for that region.

The online version - launched in 2009 - has been very popular, with more than 700,000 visits and 260,000 downloads. Be sure to check it out.

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Here I am on the flight line at Boeing Field where I did a video and actually managed to walk and talk about our forecast. Click above to take a look.

By the way, we’ve also posted a interesting feature story you might call “the making of the CMO.”

Our 20-year forecast is really key to everything we do. It helps shape Boeing’s product strategy. We use the data and information from the forecast in developing our long-range business plan. And we share the data in the forecast with our suppliers and customers.

The better our forecast, the better our strategy, the better our business plan and the better advice we can give our customers and suppliers.

It’s quite a journey into time for our Current Market Outlook team.

Or, as Doc Brown would say in answer to Marty McFly’s question at the end of our featured film, “Where you goin’ now, back to the future?”

Nope. Already been there!

One week

LONDON - The Farnborough Air Show is fast approaching.

It’s going to be an exciting one, and I expect the show to focus on a couple of key stories: The recovery of the market and the buzz around the 787 and all of the new airplanes around the industry that are in development.

You can also count on one more thing. At the end of the day someone is going to make much of the “orders race” aspect of the show.

But I just want to tell you that however you may regard the so-called air show orders race, it’s not a race when there’s only one horse running!

I don’t mean to sound like a broken record here, but I do want to reiterate the point we’ve made each year. This is but one week out of 52.

Boeing decided several years ago that we would gladly accommodate our customers who choose to make announcements at air shows. But we also decided to ensure that we had an open, transparent process - so that each and every week that we received confirmed airplane orders we would post those on our website.

Our competitor, Airbus has a different approach.

But what really matters is how you perform over the long haul and where you are when business is tallied at the end of the year.

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Even though we’ve been “out-announced” by something like 3 to one at the air shows, believe it or not, we’ve found a way to be the market share leader when you total up all year-end orders for the past five years.

When you think of following an “orders race” - think of checking our Orders and Deliveries website each week - that’s where you’ll find the real story. For example, we added new airplane orders just last week.

So, this year at Farnborough, will Boeing have order announcements?

Absolutely.

If that’s what our customers want.

It's show time

The Farnborough International Airshow is a little over a week away.

This is going to be a dynamic and exciting show in many ways (as always) and I’m looking forward to getting started. I’ll be heading to the U.K. next week and unveiling our 2010 Current Market Outlook on Thursday in London.

At the show itself we’ll have a rather full schedule of events and announcements.

Of course, a lot of the buzz is going to be around the international debut of the 787 Dreamliner at Farnborough.

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ZA003 will soon be winging its way to London.

ZA003, the third flight test airplane, is scheduled to touch down on Sunday morning, July 18. It will be on static display at the air show through mid-day July 20.

For the media and other guests, there will be an opportunity for scheduled tours. I’m guessing there will be keen demand to get up close to the airplane!

Revolution -9

We’ve completed firm configuration on the 787-9, the second member of the Dreamliner family.

Firm configuration defines the airplane’s overall capability (structure, propulsion, systems) and allows us together with our suppliers to begin detailed design of parts, assemblies and other systems.

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A rendering of the -9 as it will appear in flight.

The 787-9 will have a range of 8,000 to 8,500 nautical miles (14,800 to 15,750 kilometers).

It’s a longer version of the Dreamliner, seating 250-290 passengers, or about 16% more than the 787-8.

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A vision of the 787-9 at takeoff.

This is another great program milestone - the result of years of collaboration with our partners and customers.

Now, as detailed designs are completed and released, production can begin, with first delivery of the 787-9 scheduled for late 2013.

 

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