Playing offense

And in a warning to competitors Muilenburg said the company was “playing offense not defence” as it approaches the future. “We are positioning ourselves for the future with work on productivity and competitiveness and investing in innovation. ” But Muilenburg said Boeing will not be rushed into any early decisions on building a new aircraft to serve what is now called the middle of the market (MOM) between its 180-220 seat single-aisle 737s and the much larger twin-aisle 270-330 seat 787. The company, which is the world’s largest producer of aircraft, has a full plate with certifying and delivering the 737 MAX, the 787-10 and the 777-8X/9X. Boeing will deliver the first 737 MAX next year, the 787-10 in 2018 and the 777X in 2020.

“The 737 MAX is going very well and the 787-10 is on track, while the 777X is going well,” said Muilenburg.

However he watered down speculation that a launch of an even larger 777-10X was imminent saying that while there is some customer interest, and it would be a simple exercise, a go-ahead was not close.

“We have built in the ability to stretch the 777X further. ” He added that the bridge between the 777-300ER and 777X was not yet filled but he was confident that it would be. “We have a bit more work to do in that area. ” With regard to the 787 development costs, Muilenburg said that the company is now generating cash on each 787 delivered. “We have delivered more than 400 and we have a backlog of firm orders of more than 700. The aircraft is doing very well and the operating costs of 20 to 25 per cent better is being delivered. ” What is significant, said Muilenburg, is that the 787 has opened up 100 new routes since it was introduced into service. “We are now in a positive cash position on the program and we have the rate up to 12 a month,” he said.

Muilenburg added that now that the 787 supply chain was stable Boeing was working with suppliers to drive greater efficiencies. “The opportunities to expand the current order block of 1,300 are clear. ” Some analysts suggest that Boeing will build between 3,000 and 4,000 787s, which would make it the industry’s most successful widebody.

Muilenburg said that orders for its narrowbody 737 program were very strong and the production rate is climbing from the current 42 a month to 47, then to 52 and finally 57 by 2019. “We are oversold,” he said. Boeing will deliver the first 737 MAX ahead of schedule in the second quarter of 2017.

“However, the widebody market is a little hesitant,” he added, but as he was saying those words, Boeing was firming up a previously announced deal with Russia’s Volga-Dnepr for 16 more 747-8 Freighters that will keep the iconic jumbo alive through 2019 when Boeing expects an upturn in cargo to breathe new life into the program. By 2019 there would 200 to 300 747 freighters which would need replacing said Muilenburg, and the 747-8 was unmatched in the marketplace in capability. Currently, Boeing is building 747s at a rate of just six aircraft a year – its lowest rate ever.

He added that cargo was a challenge reflecting the world’s lacklustre economy, but Boeing was finding more stability in US defence spending.

“In fact the global depth in defence is a strong suite [for us]. ” On commercial backlog Muilenburg said Boeing expected to receive as many orders this year – 750 – as it builds.

The message was clear from Muilenburg that Boeing was on the offensive on production costs and innovation, but the “ship” was on a steady course to ensure it would be around in another 100 years.

While we are in a strong position, we can’t stand still.