Boeing targets more than 800 aircraft deliveries in 2018

Boeing is increasing 737 MAX production.

Boeing says it expects to deliver between 810-815 aircraft in calendar 2018 amid growing passenger demand and rate increases for its 737 narrowbody program, a seven per cent increase on the 763 aircraft deliveries it achieved in 2017.

The outlook for the current year was announced on Wednesday (US time), when Boeing released its financial results for 2017.

The aerospace giant reported net profit of US$8.2 billion for the 12 months to December 31 2017, up 67 per cent from its US$4.9 billion result for 2016.

Boeing has three main units – Commercial Airplanes, Defence, Space and Security, and the recently established Global Services that provides training and professional services.

The results, which were a little better than market estimates, included the impact of the US government’s recent tax changes which reduced the corporate tax rate. Operating margins jumped 4.8 percentage points to 11 per cent, Boeing said.

Boeing chief executive Denis Muilenburg said it was a record year of financial and operational performance.

“In 2017 we delivered the first 737 MAX airplanes, launched the 737 MAX 10 and completed the 787-10 first flight, all while delivering more commercial airplanes than ever before,” Muilenburg said in a statement.

“We flew the first KC-46 tanker to be delivered to the US Air Force, were awarded an initial contract for the Ground Based Strategic Deterrent program, and a contract to provide 36 F-15 fighters to Qatar. We launched Boeing Global Services during the year, to deliver greater lifecycle value, and achieved growth that outpaced the market.”

Looking ahead, Boeing plans to raise the production rate of its 737 narrowbody program from 47 aircraft a month currently to 52 a month in 2018 and 57 a month in 2019.

Muilenburg said deliveries of its new 737 MAX would represent between 40-45 per cent of total 737 deliveries in calendar 2018.

The airframer has also previously indicated the production rate of its 787 widebody was due to increase to 14 aircraft a month in 2019. This would be the highest ever production rate for a widebody program.

Meanwhile, the 777 program would have a production rate of 3.5 aircraft a month in 2018 and 2019 as Boeing transitioned to the 777-X.

While the competitive environment was “tougher than ever” and not getting any easier, Muilenburg said it remained a very attractive market.

“I’d say it’s probably the most attractive industrial market in the world,” Muilenburg told reporters and the financial community during Boeing’s results conference call.

“It’s about a US$7.5 trillion market over the next 10 years. It’s a growing market.

“And as a result, it’s attracting more competition both at the OEM level and at the supply chain level. So, we expect the competition to only get tougher. And our focus is to make Boeing ever tougher from a completive standpoint as well.”

Muilenburg said the company was in ongoing “productive discussions” with more than 50 customers on a potential new middle of the market aircraft.

Entry into service, should Boeing proceed, is planned for 2024 or 2025.

“We still have time to do the work and determine the business case,” Muilenburg said.

“We’re not going to launch this airplane unless the business case makes good sense for both us and our customers and we also have some enterprise transformation objectives that we wanted to achieve as we look at our second century production and supply chain systems.”

Muilenburg said the company would wait until the full details of the US International Trade Commission’s (ITC) decision on the dispute with Bombardier before determining what the next steps were.

“All we know at the moment is the outcome, we await the details of the ruling and that will help us understand some of the rationale behind it and allow us to make decisions on our path forward,” Muilenburg said.

Boeing had complained to the US government that Bombardier sold C Series aircraft to Delta Air Lines at unfairly low prices in what it alleged amounted to price dumping.

Further, Boeing alleged the C Series benefitted from what it said were illegal subsidies from the governments of Canada and the UK.

While the US Department of Commerce upheld the complaint and levied preliminary duties bringing the total tariff for the C Series to 300 per cent, the ITC ruled that Bombardier did no harm to Boeing with the sale of the C Series to Delta Air Lines.

Delta Orders State-of-the-Art, Fuel-Efficient Bombardier C Series (PRNewsFoto/Delta Air Lines)
Boeing had complained to the US government that Bombardier sold C Series aircraft to Delta Air Lines at unfairly low prices.

Meanwhile, Muilenburg described a potential partnership with Embraer that has been publicly canvassed in recent times as a “great strategic fit”, with discussions ongoing.

“We do see complementary combination between our companies with complementary product lines, verticals capabilities, services capabilities and innovation and talent investments,” Muilenburg said.

“We know that the government of Brazil has raised some concerns or issues that we fully respect and we’re working through the details of potential options going forward and doing that in a very diligent way.

“So, I’m hopeful that we can bring that deal to conclusion, but [there’s] more work to go on that front.”

Muilenburg said that even if a deal with Embraer could not be reached, Boeing still had a “very strong plan for the future”.

“We have a solid strategy, we know exactly how we’re going to grow for the future, we’ve got the right investments identified, we are ready to compete and win in the future regardless of the outcomes of these trade matters.”

“We’re going to stay very focused on executing that strategy. It’s a winning strategy.”

News of a potential tie-up between Boeing and Embraer emerged after it was announced in October Airbus had taken a 50 per cent stake in Bombardier’s C Series program.

Comments

  1. Scott says

    MOM seems like a walk up starter for QF but then they prob would stick with 737 and order Max in a joint purchase ? Unless lured by A320neo / A321ULR and have common narrowboby fleet across both airlines in the group.

    MOM also a very viable proposition for Virgin Group, Widebodies found out to be too large for transcon with TWO established full service carriers now plying the routes, also turn times/cycles killing airframe on triangle routes hey are too heavy.
    MOM now seems like a good fit now for Virgin as it has committed to 737 long term. And importantly 737 MAX for full service airline, it will in a few years have a common narrow body across its group the 737, with the EJ to exit in a month or two.
    If Virgin are interested should get in early with associated discounts and it will allow Virgin to run transcon/ expand Asia and pacific. Tiger to expand international Asia and pacific no expensive widebody and common type across group with economies of scale.

  2. Lechuga says

    @scott I can see your point.
    Can’t understand why virgin only has the Max 8 on order, surely if they’re trying to phase out trans con A330s they’ll snag the Max 9 or 10 variation, even for Mel-Syd and reverse and trans Tasman. It only makes sense.

    In fact I’m still really disappointed that the 757 was never picked up by Qantas or even Ansett in its day. Would have been the perfect aircraft for those routes.