Tuesday, January 6, 2015

Boeing Numbers From 2014 Shows A Dynamic Presence.

Boeing has once again made a statement without an Airshow as a back drop. In 2014 they delivered or where paid for 723 Aircraft. These numbers out pace Airbus by a substantial margin. The second trend number is orders taken by Boeing during 2014 at 1,432 order for all types. Inside the order number are the layers of gross billions ordered. Having more wide bodies ordered than its competitors is a significant. In that profits are wider on wide bodies such as the 777 family,  than say a 737 family aircraft. The devil is in the details when reaching for a bottom line future profit. In total Boeing's back-log is rising even though production has increased during 2014. The back log number has reached 5,789.
 Score Card for Boeing During 2014

Chart Credit: Product Design & Development (see link below this credit) 

Boeing Achieves Milestone Year

The almost six thousand unit number gives Boeing flexibility for making a production transition during model changes, such as changing from the 737 NG to the Max, and changing from the 777-300-ER to the 777X family. You could say Boeing needed this year more than one could predict as it keeps its nose to the grind stone selling and building at a feverish pace. The 747-8i becomes less critical for Boeing as no orders were taken by Airbus in 2014 for its A380. The Airbus giant aircraft has hit the order wall hard as they gobble up A380 Backlog in production.

Boeing has another shot at fitting the 747-8i into a order niche from its customers in 2015. However the 777-9X looms over both as a more strategic aircraft fitting into a window that neither the A380 or 747-8i can fit in. The High density airport compliant niche exist where Airbus has overbuilt with its A380 behemoth. The 747-8i is relegated as an excellent freight partner. Passenger service will evolve to the the 777X family and loyal Airbus customers choosing the A350-1000 customers.

Boeing established the 787 as a Boeing standard reaching stability it promised in 2014. It no longer is plague with teething woes and continuous refinements which are making this model exemplary. 787 Orders started to trickle back in 2014 for the Dreamliner with Boeing netting 41-787's in 2014. A good year shows signs, Boeing has turned a corner for the 787, which will propel it in 2015 with an even higher order number than 41. It could obtain 100 787 orders in 2015 as my own prediction is based upon the rapid deployment from Boeing's factory.

What this means is that Boeing increased 787 production, where it has demonstrated four things for the customer:

  • The 787 back-log will soon slide under the A350 back-log.
  • Boeing has dialed in the 787 on the production floor 
  • There will be no surprises resulting in work stoppage.
  • Customers will get a 787 sooner rather than later   
Those talking points mean that Boeing can align the delivery window to a customers five year plan better than Airbus can. It can delivery within a customers most opportunistic time frame. Last year Boeing could not promise this as too many plates were spinning in Boeing's air. It had not yet assured customers from battery issues and work stoppage. The glitching chain events were not stopped yet, and the wait in line was closer to 1,000 back than under 700 back at the beginning of 2014. 

2014 proved to eliminate the aforementioned obstacles for Boeing as they gather another 41-787 orders.  In 2013 Boeing received 183-787 orders. This year was a bottom period. It will move upward in 2015 somewhere between the range of 2013-2014 order totals. The second wave of orders is coming for the 787 in 2015. The first wave was the initial book order until it dipped to 41 in 2014, citing all its troubles and backlog. Boeing needs a manageable order book for its customers as they need alignment to airline customer planning over a broad spectrum. An airline has cycles and expansion plans. It has money sources that are limited to profitability and financing windows. These opportunity are squeezed into frame of time. The window often shuts where a Boeing customer is caught in line on a seven year backlog. In the mean time, an airline  competitor may expand its routes or its plans devouring the airline company waiting in line for its 787.

Boeing must level its over-all backlog for all models at around 60 months. This will fall into a customers planning mode of five years. A customer's desirable time frame for fleet renewal, fleet expansion and financial sourcing from operations. Once they have achieve back-log management they can resume aggressive marketing from the "we can deliver when you need it", perspective. Boeing is emerging from taking orders for 2021 time frame to taking orders for the 2020 delivery cycle. This in itself, is driven by production efficiency. Boeing needs a five year backlog as world economics can flatten, leaving the major aircraft builders gasping for sales. Money is made on consistent optimal production driving the bottom line.