January 2012 Archives

Already legendary

I’m just back from Dublin, Ireland where the 787 Dream Tour made another impressive stop.

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Hello from Ireland!

I’ve used many adjectives over the years to describe the 787. Now there’s a new one to add to the list - legendary.

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Mike Sinnett, vice president and chief project engineer for the 787 program, accepts the Aircraft of Legend award. Courtesy of Kiddie Hawk Air Academy / Larry Grace.

During a ceremony in Beverly Hills, the Living Legends of Aviation presented the 787 Dream Team with a special award— the very first Aircraft of Legend award. While the group has honored the likes of everyone from Buzz Aldrin to Morgan Freeman, this is the first time an airplane itself has been recognized.

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Honored to receive the first Aircraft of Legend award.

The Legends event is produced by the Kiddie Hawk Air Academy, which introduces children to flight with the Kiddie Hawk Trainer.

It’s quite an honor for us and a real tribute to the thousands of men and women at Boeing and our partners around the world who’ve created an airplane that is already legendary.

No looking back

The way we ended 2011 with such strong orders, it’s really no surprise to see just how well the company did in the fourth-quarter. The numbers released today show that earnings per share rose to $1.84 on revenue of $19.6 billion thanks in large part to commercial airplane deliveries. For the full year 2011, earnings per share increased 20 percent to $5.34 on record revenue of $68.7 billion.

On the commercial side, we have a record backlog of 3,771 airplanes worth $296 billion, which equates to six years of production at current rates. BCA revenue also increased by 14 percent for the full year.

But what I’m most excited about is where we’re going in 2012. On the commercial side, today’s guidance shows that deliveries are expected to be between 585 and 600 airplanes. 70 to 85 of those deliveries are expected to be 787 and 747-8s, of which approximately half are 787s.

And our prediction of 2012 being the Year of the 737 MAX continues to look solid. Earlier today, Norwegian announced a firm order for 100 737 MAX airplanes and 22 Next-Generation 737-800s. It’s the largest-ever Boeing order from a European airline.

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A 737 MAX in Norwegian livery.

This will be a very defining year for Boeing as we continue our production rate increases and work to put our airplanes into the hands of our customers. And while there’s no looking back, I do want to share some of the highlights from fourth-quarter 2011 that helped us end the year on a great note and provided the momentum for a strong start to 2012.

737

The agreement with the International Association of Machinists & Aerospace Workers ensured the new 737 MAX will be built in Renton. By year’s end, the MAX had more than 1,000 orders and commitments from 15 customers. In the fourth quarter, the team started to produce the first Next-Generation 737 at a rate of 35 per month, the highest ever. The program booked 551 net orders and delivered 372 airplanes in 2011.

747-8

In October, launch customer Cargolux took delivery of its first 747-8 Freighter. The program delivered nine of the jumbo freighters in 2011. The airplane’s performance has been exceptional with a dispatch reliability rate approaching 97 percent. The 747-8 Intercontinental is on track for a delivery early this year to the first VIP customer and to airline launch customer Lufthansa.

767

Boeing remains on plan to deliver the first 18 combat-ready tankers by 2017. In the fourth quarter, FedEx Express ordered 27 767-300 Freighters, pushing total orders for the freighter to 111. By year’s end, the program had delivered 20 airplanes to five customers and received 42 orders - a mix of tankers, passenger airplanes and freighters.

777

The 777 won an unprecedented 200 net orders in 2011, breaking the record of 154 orders set in 2005. In November, Emirates ordered 50 777-300ERs worth $18 billion, one of the largest orders by dollar value ever. The 777 production rate rose to seven per month for the first time since May 2010. In November Boeing began assembly of its 1,000th 777, scheduled for delivery to Emirates this March. In December the FAA approved 330-minute ETOPS for the GE-powered 777 fleet. During the fourth quarter, the program delivered its 50th 777 Freighter (to FedEx Express) and its 300th 777-300ER (to Biman Bangladesh Airlines).

787

The fourth quarter saw ANA put its first 787 into revenue service and the airline took delivery of two more Dreamliners. ZA001, the first Dreamliner, flew to New Zealand and Australia— and the 787 began an around-the-world Dream Tour. In December the Dreamliner set world records for speed and distance.

Commercial Aviation Services

The Boeing China Service Center, which provides maintenance and engineering support to China’s growing commercial aviation industry, opened in Beijing in October. In November, CAS signed its 50th customer for Airplane Health Management, a software system that gives airlines real-time, predictive maintenance information. In December, Boeing announced its 50th order for a 747-400 Boeing Converted Freighter.

Build A Bike

As a former engineer, I still miss the hands on part of bringing an airplane to life. But recently, I had the chance to work on a production line using the “lean” manufacturing techniques we talk about all the time. Okay, so we weren’t building airplanes. But I teamed up with other members of Boeing’s leadership team during a retreat in Arizona to build 202 bikes in 90 minutes.

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A great team from Boeing gets to work. That’s me on the bottom right.

The Build-a-Bike event was part of an effort by Boeing to reward children in the Mesa School District. The bike recipients, first and third-graders, were selected based on guidelines established by the school district including attendance and classroom achievement.

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The bike building marathon is just one way that Boeing’s Global Corporate Citizenship helps make a difference in the communities where our employees live and work. In total, $147 million from The Boeing Company and its employees were distributed around the world in 2011 through thousands of charitable grants and business sponsorships.

It was truly a pleasure and a lot fun to take part in such a great effort. Congratulations to those deserving students in Mesa and enjoy the bikes!

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Start me up

There’s no doubt 2011 was a more challenging market than our customers anticipated. So what’s in store as we get deeper into 2012?

For airlines, the name of the game is profitability—and it’s good to see that IATA is forecasting modest profitability for the year. This is really a testament to our customers who’ve managed their capacity and costs despite high fuel costs and a sluggish economy. While it will be a challenging year, I’m still expecting to see passenger traffic grow by 5 percent. The cargo market should start to rebound in the second half of the year, although growth will be below the long-term average.

With our strong backlog and a market that keeps growing, every indicator shows that we’re on the right track as we increase our rates to keep up with the true demand in the market. That demand is coming from emerging and developing economies, growth from low-cost carriers, and the need to replace older aircraft with more fuel-efficient airplanes. In fact, we see more replacement than growth in both North America and Europe over the next 20 years. The chart below shows some of the key drivers of market growth.

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Next week, we’ll unveil our delivery guidance for 2012 as we release our earnings report. As we start up the new year, it should be very exciting— especially with the 737 MAX as we take the more than 1,000 orders and commitments for the airplane and bring them to the bank.

Smooth sailing

The 787’s smooth entry into service will hit an incredible milestone this weekend when ANA welcomes their 100,000th Dreamliner passenger. Since ANA launched two domestic routes with the 787 on November 1, there have been very few empty seats.

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The first Dreamliner delivered to ANA at Tokyo’s Haneda Airport.

Load factors for ANA have reached 88 percent, 16 points higher than their other aircraft on the same routes. We’re also proud to report the Dreamliner’s reliability has been impressive, with an on-time departure rate of 96.3 percent.

Later today, ANA will launch its first 787 service from Tokyo to Beijing. And later this month, they’ll begin service from Tokyo to Frankfurt on the Dreamliner.

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Here’s the 787 that ANA will use for its service from Tokyo to Beijing.

All of this momentum for the 787 comes as we get more good news on the order front. Earlier this week, we announced a new order for 10 Dreamliners. And Air France-KLM confirmed their order for 25 787s that was placed at the end of 2011. Total 787 orders now stand at 870 airplanes from 59 customers.

By the end of this year, we expect more than one million passengers will experience what this airplane has to offer. I got my first chance to fly on the 787 during the Dream Tour in China and it was everything I expected—and more. I hope you get the chance to experience it for yourself as more of our customers receive their airplanes. Congratulations to ANA on all of their success with the 787 in such a short amount of time.

35 reasons to celebrate

35 seems to be the magic number in Renton today. Employees at the 737 factory celebrated as the program officially reached the rate of 35 airplanes per month. The first airplane at the new rate was delivered today to AWAS Aviation Services, Inc. Norwegian Air Shuttle will lease the airplane from AWAS.

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The first airplane delivered at the rate of 35 per month.

Meanwhile, the 35th airplane at the new 35 rate is rolling out of the factory today—but not before serving as the backdrop for an employee event celebrating the efforts to reach this milestone. With beach balls falling from the ceiling and a live band playing in front of thousands of employees, individual teams were recognized for their innovative ideas that allowed the program to become a lean machine.

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737 employee teams were recognized during a celebration at the Renton factory. The 35th airplane at 35 per month served as the backdrop.

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Beach balls drop from the ceiling of the 737 factory.

Today’s event was also a chance for employees to celebrate the news that the 737 MAX will be built in Renton. Saying the accomplishments of the entire 737 team played a key role in selecting Renton as the Home of the MAX, 737 VP & GM Beverly Wyse congratulated employees for their dedication. Passing the 1,000 mark for orders and commitments for the 737 MAX shows just how popular the airplane has already become in a short amount of time. I’ve said it before and I’ll say it again now. 2012 will be the Year of the MAX.

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Chance McKinney and Crosswire perform during the 737 event.

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Thousands of employees packed the Renton factory for today’s event.

I’m constantly amazed at the work our employees do… and it’s paying off big time. They’re the reason we’ve reached 35, and they’ll be the reason we’ll soon hit 38 and 42.

Back to business

First off, let me wish all of you a belated Happy New Year. 2012 is starting out with more good news— thanks in large part to 2011. We just tallied our orders and deliveries from last year and there’s reason to be positive about the year ahead.

We booked 805 net orders in 2011 and delivered 477 airplanes. Compared to last year, orders are up by 275 airplanes and deliveries are up by 15. All of that is due to record-breaking orders, including the best year ever for 777 orders. We fell a bit short of our delivery guidance on 787s, but our number one goal this year is to make sure Dreamliner production is stable and reliable as we get those airplanes into the hands of our customers.

The end of year totals also revealed even more amazing news about the 737 MAX. We’ve now topped 1000 orders and commitments from 15 customers. I’ve said 2012 will be the “Year of the MAX” and these latest numbers show we’re already heading in that direction.

As we turn our focus to the rest of 2012, I hope you’ll enjoy this look back at some of the many accomplishments from 2011 captured in photos.

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Rollout of the 1000th 767 (2/2).

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The premiere of the 747-8 Intercontinental (2/13).

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Enjoying the Intercontinental’s big day with my son Joel (2/13).

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Employees on the 767 line celebrate the tanker contract win that was announced Feb. 24.

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The 777 Freighter completes two years in service (February).

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First 737-700 with the new Boeing Sky Interior goes to airberlin (3/11). In total, over 200 737s with the Sky Interior have now been delivered.

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The 747-8 Intercontinental takes off on its first flight (3/20).

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787 pilot training begins with our launch customer ANA (4/23).

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Our South Carolina 787 Final Assembly Building opened in June.

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The 747-8 Freighter was just one of our airplanes at the Paris Air Show in June. It was the first-ever transatlantic flight by a commercial jetliner powered by biofuel in all four engines.

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The 787 lands for the first time in Japan as it conducts test runs with ANA (7/3).

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Boeing and Airbus share the stage as American Airlines makes a big commitment— agreeing to order up to 300 of our airplanes (7/20).

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The second Dreamliner, ZA002, made a special fly-by as the 787 was certified by the FAA and EASA (8/26).

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The 737 MAX is unveiled (8/30).

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First delivery of the 787 Dreamliner (9/26). Employees lead the way as one of ANA’s Dreamliners is towed into the big event.

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Posing with Joe Sutter during first delivery of the 787 (9/26).

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First delivery of the 747-8 Freighter (10/12).

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The 300th 777-300ER went to Biman Bangladesh (10/24).

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Work begins on the 1000th 777 (11/9).

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Emirates orders 50 777-300ERs worth $18 billion (11/13).

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Lion Air makes historic commitment for up to 380 737s (11/17).

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Having a blast on the first leg of the 787 Dream Tour through China in December.

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Landmark agreement between Boeing and International Association of Machinists & Aerospace Workers on four-year contract extension, making Renton the home of the 737 MAX (12/8).

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Southwest becomes launch customer for the 737 MAX with a record-breaking order (12/13).

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7000th 737 goes to flydubai (12/16).

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I’ll end with one of my favorite photos from all of 2011.. The 747-8 Intercontinental and the 787 Dreamliner flying side-by-side over Washington state.

 

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