787 Book To Build Metric An Indicator of Program Health

A "Book to Build" (BB) ratio has relative importance for a programs health. Ideally a ratio of one means for every 787 ordered one is built. A solid number for a mature program. However, successive time periods of one to one or any other ratio may indicate a potential problem or becomes a problem for someone else.

If the backlog is small then a manufacturer would want a slightly larger than one BB ratio until it reaches its ultimate production capability for satisfying customers.

If the BB ratio goes under 1 then the backlog may reduce itself over time where the less than 1(<1) BB then becomes a program weakness. 

Because of extended <1 ratios, its production must decrease, and it will indicate a smaller cash flow going forward. If the backlog becomes so large it discourages ordering, strains supply chains and requires capital investments for plant expansion, then it becomes a management problem. Therefore a +1, 1 or <1 BB ratio becomes somebodies problem over time.

Currently during 2016. the Boeing BB ratio for the 787 is running at about .45 and is <1. A manageable number because of its huge backlog that is already causing customers to wait up to 7 years before receiving its 787's ordered. The delivery wait time becomes another relative number depending on a customer’s needs, capitol, or market impulse. Now at this time there are two or three driving factors affecting BB ratios were a number in itself like .45 is a nebulous, relative, and conditional factor, dependent on multiple seasonal adjustments throwing the whole mess into statistical ball for College graduates living in a cube.

Going back to the Boeing 2016 BB ratio for the 787, the Boeing VP wants senior management to say the BB is right inline with our projections. which in itself, is a nebulous comment because a projection could be a bad or good indicator of things to come. 

Currently, and in Boeing's case, they are in a strong position until the backlog drops below a three year output (of about a 390 backlog) and is in a weak position when the backlog is seven years out (of about a 910 backlog). The Boeing BB can absorb about another two years of a less than "one" BB ratios before big orders are needed during a future production year. 

Airbus is rolling dangerously near problems with its single aisle large backlog creating a low market order absorption capability and its leaner order intake for the A350 program will shrink its backlog at an alarming rate. The Airbus ratios fall close to a perfect storm from lack of wide body orders and too many single aisle orders adjusting its production capacity during the next five years while costing Airbus Euros. Qatar seized a moment for the 60 LOI Max orders because they too are watching ratios and backlog size , and when it needs to order for optimal deals.

·      The recent Qatar order for 30 787-9's is a prime clue for what the market absorption for the 787 has become.

·      The 787 is validated from a strong Qatar (options to order) occurrence who is the most fussy Boeing Customer.

·      In spite of other factors concerning trade deals with US military equipment, it is a strong signal Qatar is still leveraging ordering deals and favoring Boeing with this order. The lesson learned is that Qatar continuous its independence with the mega builders by playing hard to get.

·      Finally, Boeing can now move forward with greater assurance moving its BB ratio closer to 1 as an optimal position while backlog continues to shrink.

SEE... book to build ratios are not complex, if you are a VP and have minions to explain it all, and how it will affect Qatar at the next Middle East Air Show. The bottom line is so much easier than BB ratios.

Does Qatar Know Something We All Don't Know About The Max

Al Baker: “For us to mitigate the risk, we had no alternative but to order the reliable 737 family of aircraft.”

Al Baker is a shrewd and wise business man who does not make knee jerk retaliatory moves towards manufacturers for whom he has great needs towards the fortunes of Qatar Airlines. The recent Letter Of Intent (LOI) for 60 Max aircraft was more than a warning shot over the Airbus bow. It was an unleashing of an offensive effort coming from Al Baker's hip pocket after his former true intentions of making Airbus his premier supplier of Qatar's aircraft. A LOI is a gentleman's agreement with an "if" statement somewhere in that letter. 

Al Baker got Airbus' attention and can salvage something for Boeing if he does view things directed towards doubts with Airbus' capabilities. 

He has expressed the heart of the Airbus disappointment in a not so cryptic terminology. He is not happy with the failure of the A-320's GTF engine from its start-up. The GTF engine theory did not live up to its promise and needed extensive re-work. The A-350 market performance displayed a 90% reliability numbers with its first four Qatar deliveries.

What was not said and is held close the Al Baker’s vest, “what are the A-350 actual efficiency numbers in operation from the desert region?” It can be speculated those numbers too have stunned Al Baker's love of Airbus product. 

Boeing is coming out with an error free 737 Max with a proven engine having a 14% efficiency improvement over former models. Al Baker said so, mentioning what's behind Qatar's intent. They can get the "Max" sooner rather than later with an operationally sound engine for Qatar's desert region. It's kind of a big deal. Boeing can still lose the market battle if they drop "ball" on the goal line. 

But Boeing must prove itself under a single aisle LOI after which Qatar has already ordered 50 confirmed A-320 NEO’s, while waiting for its Airbus deliveries. But... they canceled four A-320's already. Another sign Boeing has a chance and is positioned well to step-in, and steal the charge away from Airbus, which it seems they have already done that little thing.

The spear is pointed towards the customer's operational heart using commonality. Watch the 737 Max-8 test pilot comments, "This avionics display on the Max looks just like the 787,747-8i and 777X displays". Therefore, when a Boeing customer orders across types they are buying pretty much the same commonality for which its pilots, maintenance and passengers will depend on while having a high valued experience both on the bottom line, and just the bottom in the seat.

Qatar has just ordered 40 Boeing wide bodies with intent on 60 737 Max after the first capstone order for 60 777X when it was first announced. In there, somewhere, should be equal opportunity for Airbus, but you can't find it only when reading about four NEO cancellations with Qatar.

When the Boeing's 60 LOI are finalized, then Boeing must deliver on its promise as it has learned a lesson from the Airbus debacle. Al Baker has already read and validated the tests reporting for the Max before it pivoted towards Boeing. He really bought the whole family of aircraft for Qatar as a common aircraft line from Boeing. When locking in on the Boeing wide bodies, Qatar also locked in on the Max. When the Max order is finalized, then look at the Qatar booking options, which would point the way for its future plans. After-all they optioned for 30 787's when they bought the first thirty 787. Now they have just purchased those 30 options because the aircraft just "plane" works well.

Boeing, Order-up! Not 30 But 40 Wide Bodies and a Side of Single Aisles Super-Sized

Yes, Boeing has turned the tide for 2016 with 30 787-9, 10 777-300-ER and 60 more 737 Max as the LOI side dish. Some say it’s a $18 billion dollar promise from Qatar. It’s much more than market share and dominance. Qatar originally ordered a vast numbers of Boeing 787's (30/30) and A-350's (43 +37). Boeing has delivered all its initial 30 787 and Airbus, well Airbus has dithered the Qatar patience since it went into a hole when coming to this day's announcement. Qatar has now positioned itself to cancel some A-350 orders as Boeing now has 787, 777-300 and 777X added to the Books where Qatar ordered initially 43 A350-900's and 37 A-350-1000 which the first delivery A350-900 now resides under a cloud of under performing operational metrics.

Qatar Airways Orders 40 Boeing Aircraft For 11.7 Billion

Qatar Air orders up to 100 Boeing jets worth as much as $18.6 billion

This Qatar order pressures the Middle East as it seeks wide bodies in earnest. The Emirates order has come full circle after it cancelled its 70 A-350's several years back, and now news circulates about with a new order placement for wide bodies fulfilling its fleet replacement and expansion designs. Boeing is the leading candidate even though Airbus is in the order fight with Emirates, who is now more open towards any Boeing offers than any Airbus apology for biffing its original 70 A-350's.

Now Qatar, who built its fleet around the A-350 as its feature fleet wide body airplane, has turned 180 degrees with this mega billion order for thirty 787-9's and ten 777-300-ER . Then comes another 60 Max it wants as it’s under LOI soft negotiations at this time. 

The importance of the Qatar/Boeing order should not be overlooked in the wide body and single aisle market place. Competition in the Middle East is something where every nation in the region watches, and each with keen interest towards one another, causing Mid-East competitors to react. The Qatar order signals, names have been taken and they will soon kick "others" fleet's sterns.

Ouch, really Airbus, you lost this order after you where the company (Qatar) favorite with having Qatar’s 43 A350-900 and 37 A-350-1000 orders placed not so long ago. Then Airbus started delivering the A-350 first aircraft in a lumpy stream of stop and go for Qatar's displeasure. They were unhappy with the lumpy trial and error production technique where Airbus delivery schedules were uncertain.

Boeing's production efficiency help win today’s order and saved Boeing's 2016 order book. Having thirty 787-9's added is a near term solution. Let's not forget the ten 777-300-ER's as critical to the 777X production transition (not yet there but strengthening).

I can't imagine what price Boeing offered for both models as they desperately needed production slots filled during the upcoming 777 Year. It may have diverted Boeing away from a monthly production reduction in the next year. 

The sixty LOI 737 Max caught my breath as it catches the program back on fire with future customers. Qatar becomes a sales talking point for future Boeing 737 Max sales pitch. Future customers will wonder why the Max? while they get sound Boeing answers for the customer’s own operations. Part of the 737 Max LOI, is coming from receiving a Airbus “burn”. Perhaps Airbus wasn’t careful for what they wished for as they experience "Boeing like" supply chain issues of too much too soon supply strain. Qatar is not happy as thy fell behind its own expansion models from Airbus' dithering in the factory. Emirates and now Qatar, who’s next? The A-320 engine wasn’t ready and it was flawed, hence the Max order.

Boeing can capitalize with the Airbus production quandary only if they keep its promise with Middle East customer for delivery. It must keep on time with Qatar fleet plans. The Boeing product must beat the Airbus product on the ground and not in air since flying parity is so close between the two producers.

The ease of ground maintenance, information systems and longevity between service cycles makes the Boeing business case. If a Airbus delivery promise can’t be met, those NEO's on the ground becomes a moot point. "So what", if an airplane travels 100 miles further on a tank of fuel and your point is??? An airline can save millions with operation expenses and timely delivery of promises. Qatar Air gave Airbus a burn today as does Emirates when it canceled its huge A-350 order several years back. It sent Airbus spiraling with those cancellations. Now Boeing gets 40 more wide body orders and 60 LOI Max's when it desperately needs it. Airbus team meeting time, 6:00:AM Paris time tomorrow. 

Pakistan Has Entered The 787 Jetway

A prior “Winging It” article highlighted the Middle East potential and then mentioned other countries in waiting for unknown quantities of wide body orders. Today the news reported Qatar has a big Friday Oct. 8th announcement and then Pakistan came to the forefront ordering eight 787s.

A “Winging IT” predictive summary is that Boeing will add thirty-eight 787's and an additional ten 777-300ER to its order book, thus bolstering its wide-body drive before years end. 

However the story won't end there as both the Saudi and Emirate orders have not concluded. Combined they may yield close to 100 wide bodies ordered with Boeing. The catch to all this, is military play as Qatar views the region beyond commercial aviation. They have a military dog in the fight. 

If all cards are played, it will astound the aviation market as there are more Middle East players in the wings starting with Turkey. In all Boeing may trek into 2017 with more than 150 wide body orders from this point forward to the end of 2017. The majority will be 787's with about 30 more 777's on the wings. All of this can come crashing down with a change of heart for Boeing but is not anticipated.

The Middle East and Boeing's Usual Suspects

Boeing needs wide body orders stat. It has been cultivating Middle East clientele for many years. The time has come where both the slack order year meets Middle East need.

Qatar recently received its last Dreamliner order while booking so many A-350's. Today they are disappointing and a bit angry with Airbus. In the highly competitive passenger aviation business it has left Qatar holding the travel bag. Its 787 works just fine. Qatar is thinking 787 at this time when Airbus is sluggish and not as dependable as Boeing's delivery schedule.

Saudi Air is in the works with buying US military aircraft recently approved by the US to do so. A 787 package is in the works with Boeing awaiting completion of the military deal. When that is complete expect an expansion of Boeing's 787 order book. All Things 787 indicates about 13 787's.

Emirates has positioned itself after considering Boeing or Airbus who for some reason Emirates abandon a huge Airbus order of 70 a few years back (ouch). Now the negotiation are in the final stages where Emirates is deciding on a package which is centered around environmental conditions of heat and tonnage. Emirates has been deploying new deliveries of 787-9's around the region. Since Emirates cancelled 70 of its A-350's back in June 2014, the Emirates plans have a gaping hole in its inventory and needs more wide bodies than what was ordered initially with its 787-9 orders. "All Things 787", blog reports: "I can see them taking 30 or so 787-9s and 45 787-10"

A full read of All Things 787 for October 1, 2016 will put this issue in perspective!

The point of all this order chatter is Boeing is anxious for filling its wide body order book including 777X types and the Middle East is ready for this accommodation. Even Turkey has a dog in this order fight but that may come in early 2017 as it arranges financing.

The 737 Landing Gear Is A NASCAR Restrictor Plate

The super speedways existing for stock car racing are too fast for the engineered race car. Rules came where the fuel would be governed by a restrictor plate, thus keeping the speed limit within race car's design limits for keeping the drivers and fans safer than if they didn't impose a restrictor plate. 




The landing gear on the 737 gives the airplane a ground hugging stance where Boeing has painted itself into a development hole from the Seventies. Boeing needs to break this restriction of engine size in order to compete with Airbus since they are limited by ground clearance on its 737. It has a restrictor plate of sorts from the landing gear back to the engines and it has reached its limits on the top end of performance from a Max engineered configuration.

Boeing must “go long” with a landing gear. They must build a Middle of the Market follow-on for its 737 family and having a 737-10 won't do with the current 737 landing gears. However, implementing bigger engines or a taller landing gear will take too long and too much money for meeting the Airbus challenge of its A-321 market dominance. Additionally, the market capacity is shrinking as the A-321 grows its customers and market routes are filled for this class of aircraft. It's a dilemma Boeing has long recognized and has done little addressing it when building its wide body examples, and while depending on the 757 to hold off the Airbus onslaught. 

The time has come to bite the bullet and address the market segment of the middle of the market even without a plethora of order commitments, it must have confidence to move forward not with a four year delivery window from this point forward, but maybe in six years going forward. 

A four year window says, 737-10 as its “Hail Mary” throw when it needs a robust offering with foundational aspects built for the future. It needs to address a middle of the market aircraft without regard towards any hurried 737-10 response, but instead plug the market gap with a responsible 757 replacement having a range of up to 5,000 miles. It must go white paper with a taller landing gear, bigger engines, and all new technology completing an aircraft by 2022. The Boeing parts bin and suppliers can do it once the bullet announcement is fired sooner rather than later.

A 737-10 offering is just lame with a short landing gear restricting its possibilities.

September 2016 787 Program Numbers

Here comes September with a solid performance. As Boeing reaches deeper into backlog it will definitely need more orders before years end. There are a multiple sources of customers pondering 787 orders which may spill into 2017 before an impact is felt. Qatar and Emirates are to name a few.

Fig. 1

Fig 1A.

Third Quarter 2016 snapshot orders and deliveries.

Production remains at 12 a month over ninety days supporting Boeing's guidance for 2016.

Fig 2.

Program Progress:

Fig. 3

Fig. 4 787-9 has taken over the YoY 787 production pace.

Fig 5. Production efficiency shows low WIP backlog and high delivery pace.

Boeing May Reach 777 Order Goal During 2016

Boeing needs about 40 777 classics a year ordered until the 777X reaches its delivery state. Today marks a step in that direction where it seems fifteen 777's will be ordered from an Arab client thus making for a total of 30 777's in process for order additions. The Saudi order for fifteen 777's is awaiting signatures and the Iran Order for fifteen awaits further negotiation expected to be completed before the end of 2016. After adding the already booked 777's for eight during 2016, brings the totals together for thirty-eight aircraft as a Boeing possibility. 

Last week it was a gloomy outlook. This week is has become a week of possibilities pointing towards the end of the year. If there are other orders out there pending as Boeing usually has and it posts by year's end, numbers may end up with a few added surprises before 2017 begins. Boeing has the potential for up to fifty 777's reaching its planning goal for 2016. Its more likely they will reach thirty-eight and certainly twenty-three. The game is afoot where the numbers could be from twenty-three to fifty 777's ordered for 2016

However, things can get off track very easy, especially with Iran while maintaining a "don't count your chickens before they hatch" condition. A cautious optimist would include those already booked at eight and the fifteen from the Saudi's as it closes a deal during the next month or so. 

Boeing 787 Reading Assignment "Eight Years Later"

Borrowing from HeraldNet.com  comes the 500th Boeing 787 entering the factory with its swagger. This 500th body is destine for Air France in the form of a 787-9. Having this segway for a good 787 read while going forward without pause, is my humble space offered to do so. Without further ado, here is the Herald Net offering for a reading assignment.

500th 787 at the back of the line depiction 

"...The airplane is in pieces, now, but it’s in the factory: the 500th Boeing 787.

Workers loaded the Air France 787-9 onto the Everett plant’s final assembly line earlier this month, putting the program on track to be the fastest to crank out 500 twin-aisle jetliners. Boeing’s plant here and in North Charleston, South Carolina, are steadily delivering Dreamliners — nearly 12 a month. And the 787s are making good on what matters most to airlines: the company’s big claims to make an airplane that slashes operating costs and opens new markets.

Boeing is working on further upgrades to the jetliner’s cabin, which has already set new standards for passenger comfort. No aerodynamic improvements are planned for now. However, Rolls-Royce’s improved Trent 1000 TEN engine is expected to be online in late 2017 — more than a year late — offering operators even better performance, said Bob Whittington, Boeing vice president and chief program engineer for the 787.

After the plane’s problem-plagued beginning, “the view is great” at 500, he said. It’s been five years today since Boeing delivered the first 787 to All Nippon Airways of Japan. The delivery was more than three years late. But the program’s early headaches — reliability issues, production backups, an emergency grounding due to smoking batteries, spiraling development and production costs — are almost distant memories now. “We’re out of the dark days,” he said. ‘Boeing magic’. The 787’s far-flung supply chain relied heavily on outsourcing to cut development time and costs. However, the aggressive strategy created logistical and financial migraines for the Dreamliner program. Boeing committed huge resources to solving the issues, including buying out its joint-venture partners in South Carolina. That opened the door for the company to put a second final assembly line there in 2011.

Boeing matched its desire to drastically reshape how modern jetliners come together with its ambition to make the most advanced passenger plane. The 787 is the first jetliner with an all-composite material body, whereas conventional airplane bodies rely on aluminum alloys. The plane would be just as strong as an aluminum one, yet much lighter. That, along with improved aerodynamics, more sophisticated software, powerful new engines and other innovations, would make the plane much more efficient than ones of similar size and range, Boeing promised.

But early 787s rolled out overweight and customers were underwhelmed. Several airlines refused to take delivery of the earliest Dreamliners, which started stacking up around Paine Field.

Boeing poured money and people on the problems, and steadily worked through them.

“I call it the ‘Boeing Magic’ — how people come together and take on problems and come up with solutions,” said Michael Griego, a senior manager for the 787 supply chain. “It was amazing to see” on the Dreamliner.

During those early days, Griego spent long hours walking the production line with engineers and mechanics addressing problem parts — what went wrong, where did it occur, and how best to fix it now and stop it from happening again? “It was intense” work — and important, too, she said. 

“Those were good days.”

“When I remember the early days and how hard we struggled, I almost can’t believe where we are now,” Griego said. Almost there in 2012, Boeing delivered 46 787s, its first full production year. It delivered three times that many last year, and is on pace to do so again this year. The current production rate is 12 airplanes a month. Actual deliveries are slightly fewer.

The company plans to turn out 14 Dreamliners a month by the end of the decade, and the program is already gearing up for the increase, although a Boeing exec said last month that there might not be orders to support that pace.

“We’re not quite a turnkey operation, but we’re almost there,” Griego said.

The company continues to smooth out production. The 787’s use of automated machines required for making its composite material airframe has flattened the production learning curve. That helped the program rapidly increase production. But the cost of making an airplane has not fallen at a similar pace.

That has many industry experts skeptical about Boeing’s ability to get production so efficient that it can make big enough profits off future deliveries to make up the nearly $28 billion it has lost up to now. The company makes enough money from other programs and services that it can absorb the 787 losses. The airplane maker keeps those losses from bogging down its balance sheets through an accounting method called deferred production cost. That has Boeing spread costs from today across the hundreds of Dreamliners it plans to sell in years to come, while counting future expected profits now. That approach helps buoy share price and, proponents say, gives investors a more accurate view of the company over time. Critics say it is using financial tricks to obscure reality.

Regardless, it also means Boeing has less cash now to spend developing new, even shinier airplanes. Earlier this month, it closed one 787 stall on its flight line at Paine Field, where customers inspect the planes and mechanics make last-minute fixes. At the height of the production problems, dozens of 787s not ready for delivery were parked around the airport. Now, the program has only eight dedicated flight line stalls. It closed a second assembly line in Everett in 2015 as the South Carolina plant’s efficiency improved.

In 2012, 16,800 people worked on the 787 program in Washington, according to a state commissioned study.

The number is considerably less now. Boeing does not publicly comment on how many people work on a specific airplane program.

Put the coals to it in the factory, “there are a lot of projects in the works for 2016 and 2017” to further improve production and reduce costs, said John Barnfather, a senior manager for 787 manufacturing. He helps run the last spot on the assembly line in the factory.

“We put the coals to it right here,” to finish any jobs that are behind schedule — something called “traveled work” — before the plane moves outside, he said.

The amount of traveled work spiked in 2014 after Boeing stepped up 787 production rate to 10 a month. It reached a point that the company stopped loading new planes onto the assembly line here for about two weeks in August of that year in order to catch up. The flight line was crowded with factory crews and contractors tackling overdue tasks. That amount is dramatically down these days, according to mechanics on the program.

Boeing heavily tweaked the 787’s design, as the first 787-8s out of factory were too heavy to make good on the company’s performance promises. Early planes were dogged with part problems and other headaches for airlines. Then there were the smoking batteries, which led to all in-service 787s being temporarily grounded in early 2013, while Boeing and partners worked on a fix, which came a few weeks later.

“Planes always start heavy and get lighter,” said Edmund Greenslet, an aviation industry analyst and publisher of Airline Monitor. “Planes are the opposite of people, who start light and get heavier.”

Engineers typically make design improvements after a new plane starts performing in the real world. “You’re looking to cut pounds wherever you can find them,” he said.

With more than 450 Dreamliners in operation, the plane “is delivering so far on what was promised,” Greenslet said.

The 787-9, which was first delivered in mid-2014, is showing about 15 percent efficiency gains — measured in fuel consumption per seat — over similar airplanes, such as 767-300ERs. The smaller 787-8 is posting single-digit gains in fuel efficiency, he said.

The first 787-10, the biggest Dreamliner, is slated to be delivered in 2018. It will be assembled only in South Carolina.

Performance also is improving the more airlines fly the 787 and learn how to get the most out of the planes, he said.

Airlines have used the 787 to open more than 100 new routes between distant cities that would have been money-losers with older, less efficient jets.

For airlines, Dreamliners are now almost as dependable as 777s, the gold standard for dispatch reliability — a key metric in commercial aviation that tracks how often an airplane type leaves the airport gates within 15 minutes of schedule. The 777 is well above 99 percent. The 787 stumbled early on, but now is about 0.2 percentage points behind the 777, said Whittington, the 787’s chief engineer.

So far, in-service 787s have backed up Boeing’s promise to build a hardier, more problem-free plane. More than 30 Dreamliners have had their first major scheduled maintenance, called a C check. The findings are in line with the company’s expectations for wear and tear, he said.

During the checkup, mechanics scour the airplane, pulling it apart to inspect major systems and components. A 767 is supposed to have a C check, which can take nearly two weeks and cost about $700,000, every 18 months. It should have a D check — the most intense inspection — every six years. Dreamliners can go twice as long between inspections, saving airlines millions of dollars during a plane’s lifespan.

So far, 787 is on track to realize Boeing’s promise to cut maintenance costs by as much as 30 percent. “The amount of unscheduled work at the C check point is dramatically less than for a 767 or 777,” he said.

“We took risks on technology, and we took risks on a new supply base and production system. And we took risks on schedule,” Whittington said. “And the airplane turned out to be great. The risks we took on the airplane turned out to be all worth it.

“If I had something I would say do differently, we might have not taken so many stretches on the supply base at the same time that we were trying to compress our schedules,” he said. “It’s just too much risk all at one time and taking too many giant leaps.”

To change aviation, “you have to take bold steps,” and Boeing has proven its ability to deliver on bold steps time and again, Whittington said. “It’s just built into our DNA.”...

Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com; Twitter:@dcatchpole.