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costly and add undesired complexity to the
It also warns of supplier cost challenges
which will be exacerbated by an unhappy
supplier base, with negotiations still in
progress with the large structural suppliers
over compensation for design changes and
On a positive note, Bernstein points
out that key supplier "Spirit recently an-
nounced that its negotiations with Boeing
were completed on its rst block of 787
"We see this as positive for Boeing be-
cause Spirit accepted a blanket agreement
for compensation, which also includes
additional cost reduction targets."
On the cost side Bernstein sees the
next 787 variant, the 787-9, as a challeng-
ing program that will require signi cant
resources, while the 787-10 would be even
"We have lost engagement with the air-
craft" is how one airline executive sums up
his airline's view of the 787. e program's
delays has cost airlines an incalculable
amount in lost revenue, cost savings and
new business opportunities.
Air New Zealand's CEO Rob Fyfe told
Australian Aviation at the height of the
global nancial crisis that the 787 delay
was worse for the airline. Fyfe said at the
time that Air New Zealand had to hold up
key expansion plans "because only the 787
is suited to the new routes. We have had to
substantially modify our plans and we may
get locked out of a new route if a competi-
tor launches services rst."
A major aspect of the problem has been
the rolling nature of the delays, with six
months being too short to make an interim
investment decision and the "shortness"
of the delay indicating that Boeing had a
handle on the problem.
With the program now three years late,
of great concern is the ramp up in produc-
tion to support the huge backlog.
In January, while an ANA spokeswoman
welcomed the latest delivery schedule from
Boeing saying it "was welcome because it
eases uncertainty", she also insisted that
ANA is looking to Boeing for assurance
that it can meet this latest delivery date.
"We will also be seeking a full schedule
for delivery of all the 55 aircraft on order
from ANA to allow us to prepare properly
for the introduction of the new aircraft
and plan our new route network and eet
According to Bernstein Boeing will de-
liver eight 787s this year, with 61 in 2012,
78 in 2013, and 107 in 2014. At the close
of 2014 Boeing would have built 254 of the
847 787s it has on order.
A combined peak rate from the second
line coming on stream is thought to be 12
a month, which would take production
through to the end of 2018.
ere are an additional 481 options and
price rights, and if the aircraft delivers as
expected those would be quickly converted
to rm orders.
e Qantas Group still hopes to launch
international services with the 787 before
the end of next year, rather than mid year,
in the colours of Jetstar.
"Delivery delays to date have been frus-
trating but this latest update from Boeing
gives us certainty around a delivery time," a
Qantas spokesman told Australian Aviation.
Speaking to media in Singapore on Janu-
ary 27, Jetstar CEO Bruce Buchanan said
the airline's rst 787 would be delayed six
months until late 2012.
Jetstar will get a tranche of eight 313-
seat two class 787-8s initially which will
release that airline's A330s back to Qantas
to enable the retirement of its oldest 767s,
which are now aged over 20 years. ese
eight will be followed by 35 787-9s and
later seven more 787-8s.
Jetstar will receive seven of the 787-9s
from mid-2014 for southern European
ser vices and the balance will be in Qantas
colours, although some suggest that up to
25 787s will be operated by Jetstar in cur-
e Qantas 787s are expected to be in a
three class -- business, premium economy
and economy -- con guration.
ose aircraft will be used for a variety of
missions -- long range, regional and domes-
tic -- with the nal mix well and truly in the
Qantas has another 50 787 options.
Airlines such as Air New Zealand are
looking hard at the 777-200LR to ll
the void for the 787-9. e airline is the
launch customer for the 787-9 and is yet
to be advised of any delay in that delivery
program, although it is being pressured to
make some decisions surrounding its rst
McNerney maintains that the rst 787-9
will be delivered late in 2013.
Few customers have cancelled 787 orders
because the stark reality is that nothing else
will perform the range mission and deliver
the operating cost and fuel savings and be
delivered any earlier.
Boeing's McNerney was surprisingly
upbeat discussing the company's full year
results in January, and said that he expected
to deliver "about 12 to 20 787s" and a simi-
lar number of 747-8s this year -- well above
McNerney claimed that the latest delay
has not a ected Boeing's production ramp
up and it expected to be producing 10 787s
a month by late 2013.
"We had a very conser vative view and
a signi cant amount of margin in our
production ramp up plans. It was going to
nish earlier than the end of 2013 by our
internal plan, but that's largely eroded at
this point due to the slide," said McNerney.
Boeing maintains that it has retired most
of the high risk elements of the 787, and 75
per cent of testing has been completed.
While between 20 and 25 787s need re-
work, McNerney says the level of comple-
tion -- lack of travelled work -- on the latest
aircraft currently at line 31 is much higher.
Boeing's fortunes and that of the 787
program will likely change dramatically
when the rst 787 lifts o from Tokyo's
Haneda Airport and ies probably a short
sector to Osaka. e technology crazy
Japanese will hype the aircraft and slowly
the '787 buzz' will return.
For not since the DC-3 has an aircraft
promised so much and, despite the agonis-
ing delays that have caused pain across the
globe, the belief is still there that Boeing
will deliver. It must!
WAITING GAME Jetstar now expects its first 787-8s in late 2012. (Boeing)
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