Tuesday, January 9, 2018

Boeing delivers 763 aircraft in 2017, looks to raise production rates

Boeing delivered 763 commercial aircraft in 2017, led by placements of 529 single-aisle 737s—including 74 re-engined MAX variants—and received 912 net orders, valued at nearly $135 billion at list prices.

Boeing claimed an industry record for its 2017 deliveries and has now out-delivered its main competitor Airbus for six years running, according to Boeing Commercial Airplanes VP-marketing Randy Tinseth. The company met its 2017 delivery guidance “spot on,” Tinseth said.

“It was not a year without its challenges … we went through a production increase of the 767, we moved up our production rates on the 737 and we delivered our first 737 MAX in the middle of the year,” Tinseth said.

The manufacturer’s backlog of unfilled orders stands at 5,864 aircraft as of Dec. 30, 2017, equal to about seven years of production.

Orders in 2017 were “led by the strength in the single-aisle market, a strength that we saw with the launch of the MAX 10, but it was also a very big year in terms of what we able to do in the wide-body sector,” Tinseth said. “[We had] close to 200 gross orders on the wide-bodies, with orders for 747s, 767s, 777s and 787s. It was a very deep market, a broad market, with orders from 71 customers.”

Tinseth described 2017 as a very good year for its customers, citing a world economy growing in excess of 3%, a passenger market growing 7% to 7.5% and the eighth consecutive year of market growth at/above long-term trend, as well as traffic growth exceeding capacity growth.

“Which means that as load factors continue to go up, our customers are increasing the utilization of their aircraft,” Tinseth said. “They’re becoming more efficient and effective with their fleets, which is always a good sign.”

Additionally, Tinseth cited the 9%-9.5% resurgence of the air cargo market in 2017 as well as ongoing airline profitability, quoting IATA’s forecast of about $34 billion in airlines’ profit for 2017.

“To put that in perspective, it’s the eighth year in a row where our industry has generated overall profit, which I believe is a record,” Tinseth said. “If you take a look at the profitability of the airline industry, in the last three years we’ve generated more profit than the 30 years prior to that combined.”

For 2018, Tinseth said the company is expecting GDP growth to be above long-term trend again, growing at about 3%; passenger traffic is expected to continue to grow above trend, between 5.5%-6%; and the cargo market will grow at approximately 5%. Tinseth said IATA is forecasting airlines profitability in 2018—based on continued moderate fuel prices as well as a strong revenue picture—to be about $38 billion.

“Our customers, because of their profitability, are positioned to finance and buy aircraft, which is good. We’re also seeing continued growth above long-term trends … all of that puts upward pressure on our rates as we go through time,” Tinseth said. “And as a result, we’ve made the decision on 737s to go up in rate this year, today we’re building at 47 737s/month, that goes to 52 aircraft/month later this year and 57 airplanes/month next year. The strength that we’ve seen especially in the order base around the 787 gave us confidence last year to increase our rates above the existing rates that we’re building today of 12 per month. We will go to 14 a month in 2019.”

Boeing is also looking to open its completion and delivery center in Zhoushan, China in 2018, located in Zhejiang province in eastern China.

“We’ll continue to see strong opportunities in China. It’s a market, frankly, that is underserved … I’m not talking a couple airplanes—I’m talking hundreds of airplanes,” Tinseth said. “Over the past five years, especially with airplanes like the 787 and 777 coming to market there, we’ve seen very strong growth in terms of long-range international service. It’s become a very important market for the 787. Soon we will be delivering our first airplanes out of that completion center. That helps us as we go up in rate. We’ll be able to take some of the work that had been done in Seattle, that will go to China and frankly it will enable us to go at higher and higher rates at our existing facilities in Renton.”

Additional focus in 2018 will center on the bridge from the 777 to the 777X.

“We’ve been doing a lot of work around the 777, especially -300 ERs and -200 LRs as well as 777 freighters to insure that we have a successful transition between the 777 and the 777X. We made a great deal of headway on that bridge last year,” Tinseth said. “We’re in a very good position both in 2018 and 2019 and then 2020 comes the 777X. We’re going to be focused on both models this year. We’re now in excess of 300 orders on the 777X. We’re well positioned there, but we have more work to do. In 2018-2019, we’ll be focusing more on the 777X and putting the bridge behind us, and that’s our future.” 

(Mark Nensel - ATWOnline News)

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