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From: Eric1/30/2014 12:08:37 AM
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Building Boom

With Epic Backlogs at Boeing and Airbus, Can Business Be Too Good?

By Justin Bachman January 29, 2014

Photograph by Mike Kane/Bloomberg

Employees assemble Boeing 777 airplanes at the company's facility in Everett, Washington

Boeing ( BA) finished last year with a record order backlog, nearing 5,100 airplanes valued at nearly $400 billion. The company has been inundated with orders for new, more fuel-efficient versions of its top-selling 737 jet, the larger 787 Dreamliner, and the 777 long-haul workhorse. Boeing’s European rival, Airbus ( EAD:FP), is sitting atop an even larger order book—5,559 airplanes at year’s end—led by its enormously popular A320 family. The backlogs represent more than eight years of assembly work for both companies.

That kind of robust business, however, poses a question both companies have begun to consider: When is an order backlog too big?

“It is a good problem to have, but you have to be careful with this problem,” says Richard Aboulafia, a vice president at Teal Group, an aerospace consulting firm. “You never know what’s genuine industry health and exuberance and what’s just locking in orders for next-generation airplanes,” which often come with attractive discounts many years ahead of their actual availability.

Story: Six Lessons From Boeing's Big Contract Victory

If the wait for an airplane stretches out over too many years, a customer’s business can change dramatically, leading to cancelations or shifts to a different model (not to mention the crankiness factor as the wait creeps along). ”We cannot continue at this level [of orders], but what we are doing is continuing to increase production,” John Leahy, the head of sales at Airbus, told reporters earlier this month.

The obvious solution—build more airplanes—is neither quick nor easy; it can be financially taxing and lead to overproduction if not managed carefully. Boeing has raised airplane production rates over the past year, posting a record last year for deliveries of its three most popular models, the 737, the 777, and the 787.

Last year Boeing delivered a record 648 airplanes and aims to top that with up to 725 deliveries in 2014. The company is working to boost its monthly production of 737s to 42 by this summer and plans to raise that rate further, to 47 per month, in 2017 to meet airline demand. Each month Boeing now builds 10 787 Dreamliners—the company’s first airplane made mostly of composite materials—and plans to ramp up to a dozen in 2016 and 14 by 2020. It has increased 787 production three times in the past 14 months.

Story: A New Jet From Canada Takes on Boeing and Airbus, Very (Very) Slowly

Airbus has increased its deliveries for a dozen consecutive years, including a record 626 airplanes in 2013, a year in which it hired 3,000 workers to help fill the orders. A Boeing spokesman said the company expects its backlog to remain steady this year, with deliveries roughly matching orders.

Both jet makers have seen torrid demand since the 2008 global financial crisis, with airlines working to right their finances and new carriers expanding around the world. In the U.S., the largest commercial aviation market, major airlines are refreshing their fleets with the new models. Chinese airlines are quickly expanding their service worldwide, while several new budget players have formed to meet new demand from travelers. Major airlines are also migrating toward larger airplanes with more seats, which offer more attractive operating economics—but also generally take longer to build.

But the order surge is almost certain to slow, and Boeing shares slipped 6 percent today on the company’s forecast of a 2014 profit that fell short of analyst forecasts. Boeing said it will earn $7-$7.20 per share this year, below the $7.46 average of 23 analysts polled by Bloomberg. Boeing expects the global airplane fleet to double by 2033, with demand for more than 35,000 new airplanes.

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From: Eric2/3/2014 10:49:19 PM
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787 assembly problems in Charleston drag on Everett

Boeing is struggling to complete 787 fuselage sections in South Carolina since a production rate increase, and sections are arriving in Everett more unfinished and problematic than before.

By Dominic Gates

Seattle Times aerospace reporter

Since late last year, Boeing 787 Dreamliner fuselage sections from North Charleston, S.C., have arrived at the Everett final assembly line seriously incomplete with wiring and hydraulics lines missing, according to multiple sources in the factory.

The poorly done work out of Charleston threatens to undermine the company’s plans to deliver 10 Dreamliners a month and fulfill the much-delayed jet program’s original promise.

“It’s snowballing. The planes are getting worse out of Charleston,” said one senior Everett employee who oversees the production status of the airplanes.

Another Everett employee, a quality inspector, said the work out of Charleston had been very slowly getting better until late last year, but that “now the curve has gone the other way, big time.”

An engineer in Boeing’s South Carolina complex said mechanics there have been “falling farther and farther behind” since last fall, but management has insisted on sending unfinished planes to Everett to keep to the planned rate.

In a written response to inquiries, Boeing said its plan of rolling 10 Dreamliners per month off its assembly lines is on track.

“While we have some challenges to address, we see no risk to the program,” Boeing said. “Right now, Boeing South Carolina is making its rate commitments.”

However, with the planes rolling out of the assembly bays needing more fixes out on the flight line, it could be a while before Boeing actually delivers 10 jets per month.

Trouble on assembly line

The plane now at the back of the Everett line —the fourth of the new, larger 787-9 models, being built for Air New Zealand — is “a freaking nightmare ... in horrible shape,” the senior Everett employee said.

Coaxial and fiber optic cables used for radio communications and data transmission are missing from the mid-fuselage section, which is much less complete than the corresponding sections on the two prior 787-9 models that came down the line.

Ahead of the Air New Zealand jet on the line, work on a 787-8 for Polish airline LOT was delayed many hours as Everett employees tried to discover why an electrical system wasn’t working.

It turned out that six wires in a bundle of about 50 in the mid-fuselage were not connected, even though the paperwork from Charleston showed the work complete. The loose connectors were still hanging with zip-tied plastic bags around them.

Although a Charleston quality inspector signed off on the mechanic’s work, “it was not done,” the senior Everett employee said. “Fifty connectors were supposedly hooked up and six were not even taken out of the bags.”

And ahead of the LOT plane on the line, on a 787-8 destined for Aeromexico, an electronics unit was damaged and had to be replaced after installation in Everett because Charleston mechanics had inadvertently left the plastic caps on some connectors — an issue that on several previous occasions had been reported back to South Carolina.

The Boeing employees cited in this story — whether in Everett or North Charleston — cannot be named because they spoke without company authorization.

The company declined to respond to any of the specific problems they cited. Instead it offered a general assurance that the “challenges” in Charleston are temporary and that management “has a solid plan to continue to implement improvements as we go forward.”

Bigger bonuses in Charleston

In a quarterly earnings teleconference with Wall Street analysts and the press last week, Boeing chief financial officer Greg Smith conceded that the Charleston workforce has recently “experienced a higher number of jobs behind schedule in the mid-body section,” yet he insisted they are “doing a great job.”

Also last week, Boeing awarded a larger percentage annual bonus to the Charleston workforce than to the Puget Sound area workforce.

Based on company performance, most engineers here will receive 16 extra days’ pay, or a 6.15 percent bonus, and the local Machinists will get a 4 percent bonus.

In Charleston, a separate bonus calculation will give the workforce there 18 days’ extra pay, or a 6.9 percent bonus.

Yet an Everett systems engineer said it’s the Machinists on the final assembly line who deserve credit for keeping 787 production rolling.

“The only people who get these airplanes delivered are the hourly people in Everett,” said the systems engineer, who is not a Machinist. “They are finding a way.”

They must troubleshoot the airplane systems when they find issues, then finish work left incomplete in Charleston before doing the jobs they are supposed to be doing.

The quality inspector insisted, as did the other Everett workers, that this re-work does not imply a safety concern.

“The quality will be there at the end, no matter what, because we test it,” the inspector said. “We make sure it’s done right and is safe.”

The problem is the time and money needed to do the re-work, he said.

Several workers said that one plane on the line today has nearly 2,000 incomplete jobs -- including wiring and hydraulics -- that were supposed to have been done in the Charleston plant but were not.

Root causes

The Boeing South Carolina engineer conceded the problems there have been growing for months and cited three contributing factors.

First, beginning last spring, Boeing let go most of Charleston’s temporary contract hires — experienced aviation workers hired from all over the U.S. to get the program up and running, many of them working as quality inspectors.

That left a serious skill shortage when Boeing both introduced a new Dreamliner model, the 787-9, which has a larger mid-body fuselage than the initial 787-8, and then in the fall increased the production rate from 7 to 10 jets per month.

“When they got rid of the contractors, it left a big hole,” said the Charleston engineer. “You cannot lose that level of expertise plus increase rate at the same time and expect things to be normal.”

“The guys on the floor were overwhelmed with what they were trying to accomplish on a given day,” he added.

Boeing’s written response to questions backs up the Charleston engineer’s analysis of the cause of the problems.

“The 787 production system is ramping up to historically high rates for a wide-body program and introducing a second family member, the 787-9. It’s not unexpected that this would cause a temporary surge in work,” Boeing said.

After years of Dreamliner delays and a big backlog of orders to fill, Boeing’s plan is to stabilize the production rate at 10 jets per month, before moving up to 12 per month in 2016, and then 14 per month by the end of the decade.

Hiring more contractors

The company statement points out that, because the Charleston plant is non-union, it has a “unique capability to be flexible to quickly hire contract labor” to tackle a buildup of work.

Indeed, rehiring some of the skilled contract workers let go last year is an essential part of Boeing’s plan to fix Charleston’s problems.

The Charleston engineer said management is scrambling to find 300 to 400 contractors in addition to its pipeline of local direct hires.

He said hiring temporary contract labor from across the nation is necessary because there just isn’t enough skilled talent available locally in South Carolina.

Building the largely carbon-fiber-reinforced plastic 787 is much harder than the “snap-together” airplane concept Boeing originally envisaged, he said.

“It’s just as hand-built as any legacy airplane,” he said. “A plastic airplane is not a plastic model. It’s a real airplane.”

In Everett, though new hires may come in with few aviation skills, they work alongside veterans with 30 or 40 years experience and in the process absorb the meticulous work culture needed to build airplanes.

“Once we’ve been at it 97 years like you guys (in the Northwest), we’ll have a ready workforce,” said the Charleston engineer. “But now, realistically, we have to look outside for aviation experience.”

Some of the issues in Charleston are not the fault of the workforce there.

The Everett systems engineer said that many of the written planning instructions used by the mechanics there were produced in haste in the early days of the program and are riddled with errors and omissions.

(The Charleston engineer said that to compensate for the lack of aviation “tribal knowledge” among the workers in South Carolina, Boeing is re-writing those instructions to make them simpler to understand.)

In addition, said the Everett systems engineer, the fundamental decision to build the 787 in complete sections in far-flung locations has resulted in unintended complications.

For example, all the doors on the fuselage sections that arrive from Charleston have to be re-rigged in Everett.

That means the doors — finely tuned marvels of engineering designed to withstand high pressure in flight — must be mechanically re-adjusted to ensure a snug fit and smooth operation. It’s a job that takes two skilled mechanics a day or more.

Those adjustments, first made in Charleston, have to be re-done in Everett because of small changes in the shape of the plastic fuselage sections in the assembly process.

The sections flex slightly in transit from South Carolina to Everett, flex differently when fitted together with other sections, and flex along different lines again when the landing gear is installed and the plane’s weight rests on the gear for the first time.

The Everett systems engineer said the 787 program is a long way from running smoothly: “Every airplane is a struggle.”

Dominic Gates: (206) 464-2963 or

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From: Eric2/5/2014 6:20:25 PM
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Analyst Aboulafia lauds 777X, berates Boeing for creating ‘ill will’

Top aviation industry analyst Richard Aboulafia said Boeing’s 777X could give it a significant lead over rival Airbus but criticized the company’s “penny wise and pound foolish” strategy of squeezing its labor unions and suppliers.

By Dominic Gates

Seattle Times aerospace reporter

Top aviation industry analyst Richard Aboulafia said Wednesday that Boeing’s 777X program could give the jetmaker a significant lead over rival Airbus in the decade ahead.

But he also warned of the high risks Boeing management is running with a “penny wise and pound foolish” strategy of squeezing its labor unions and suppliers.

He said the 777X is a winning concept in a size and performance category where Airbus doesn’t yet have a competitive candidate.

“Airbus faces a real challenge to respond to 777X. They are going to have to find $12 billion or so to do something,” he said. Failing to do so could result in “a permanent Boeing advantage” in the market.

Aboulafia projected an overall market share of 55 percent for Boeing, versus 45 percent for Airbus, in the decade ahead. It would be an even larger gap, he said, if not for an Airbus lead in the narrowbody jet sector, where the Airbus A320neo has outsold the 737 MAX.

With widebody jets much more valuable, his market forecast shows Boeing coming out well ahead.

Speaking to local industry suppliers in Lynnwood at the annual conference of the Pacific Northwest Aerospace Alliance (PNAA), Aboulafia also had sharp words for Boeing’s hardball management approach.

He said Boeing’s strategy of forcing major labor concessions on the Machinist union in exchange for building the 777X in Washington state “reeks of some sort of psychological exercise rather than an economically driven process.”

“Congratulations,” he said sarcastically. “They saved the cost of a 777 or two per year and lost the opportunity to work together with the workforce to be innovative and productive.”

“That seems really foolish,” he added. “If you don’t have the workers on your team working with you and feeling good, you’ve lost a big chunk of the battle.”

Aboulafia said he sees the same dynamic in the Boeing corporate strategy of pushing suppliers to cut costs dramatically in order to win business on new programs like 777X.

Boeing chief executive Jim McNerney last year said that suppliers who didn’t play ball would be put on a “no-fly list.”

Subsequently, Boeing awarded the 777X landing gear contract to Canadian company Héroux-Devtek, a small player that has made landing gear parts but never built the entire gear for any plane.

That left United Technologies, which makes the current 777 landing gear, out in the cold.

“This effort to squeeze, squeeze, squeeze without regard for the consequences … has engendered a great deal of ill will ... and also inherently produces risk,” Aboulafia said.

“Héroux-Devtek is a good company, but they have never done anything like this before,” he said. “You just introduced a level of risk because you put (the United Technologies landing gear unit) on the no-fly list.”

For the local suppliers in his audience, Aboulafia offered a significant and optimistic change to his projections at the same conference a year ago.

In 2012, he forecast that Boeing would have to cut production around the middle of this decade in a lull between the winding down of current jet programs and the introduction of new models toward the end of the decade.

Wednesday, Aboulafia said he no longer sees that production downturn.

He said the aerospace industry remains “the healthiest part of the world economy” and the success of both Airbus and Boeing in selling their narrowbody jets has bridged the previously projected gap.

Dominic Gates: (206) 464-2963 or

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From: Eric2/7/2014 12:52:08 PM
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Boeing 777X Draws British Airways Interest to Replace 747

By Donal Griffin and Robert Wall Feb 6, 2014 4:01 PM PT

Boeing Co. (BA), the world’s largest planemaker, may win an order for its new 777X wide-body jet from British Airways as the carrier looks to replace its 747 jumbos. “We’re looking at the aircraft and we’re certainly interested,” Willie Walsh, chief executive officer of British Airways parent IAG SA (IAG), said yesterday in an interview in Dublin. Europe’s third-biggest airline has held discussions with Chicago-based Boeing about the jet, he said.

International Consolidated Airlines Group, as IAG is known in full, is in the midst of a fleet upgrade that saw British Airways introduce the Boeing 787 Dreamliner and Airbus Group NV (AIR) A380 super jumbo last year. To replace some 747s, the airline topped up its Dreamliner orders in 2013 and bought Airbus’s largest twin-engine long-range jet, the A350-1000.

“We see aircraft like the A350-1000 and 777X as being natural replacement aircraft for the 747s that we have,” Walsh said. “We’ve not made any commitment.”

An order for more planes would be for jets for delivery from 2019, Walsh said, with Airbus still in the running. British Airways would need to replace about 25 747s, which has four engines that consume more fuel, he said.

The 777X “is a competitive aircraft,” said Walsh, who was among the airline CEOs most vocal in recent years in urging Boeing to commit to the aircraft as soon as possible to ensure a commercial debut by decade’s end.

Source: Boeing

A Boeing 777 on the production line at the company's factory in Everett, Washington, U.S.

777X Buyers

Boasting new engines and other upgrades, the jet is being purchased by BA’s alliance partners Qatar Airways Ltd. and Cathay Pacific Airways Ltd. as well as by Deutsche Lufthansa AG, Europe’s second-largest airline, and Middle East carriers Emirates and Etihad Airways PJCS.

Last year’s Dreamliner order includes at least 12 of the largest 787-10s, which has been on sale from Boeing since June. The rest will be 787-9s, the mid-sized variant. Deliveries will start in 2017, with the A350-1000s following a year later, and all 36 long-haul jets will be in the BA fleet by 2021. IAG also has options for more aircraft of both types.

Walsh also said in the interview that he had seen no evidence of any fallout from the rout in some emerging-market currencies.

JPMorgan Chase & Co.’s measure of emerging-market currencies tumbled 3.1 percent this year, after reaching the lowest since 2009, as the U.S. Federal Reserve’s reduction in monetary stimulus, China’s economic slowdown and political turmoil from Ukraine to Thailand eroded investors’ confidence in developing countries.

To contact the reporters on this story: Robert Wall in London at; Donal Griffin in Dublin at

To contact the editor responsible for this story: Benedikt Kammel at

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From: Eric2/16/2014 11:35:02 PM
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Boeing picks Everett for building wing of 777X

Boeing has decided to build the new 777X wing facility next to the widebody jet final-assembly plant in Everett, assuring more than a decade of work on advanced composite materials for thousands of Snohomish County workers. An announcement is expected as early as Tuesday.

By Dominic Gates

Seattle Times aerospace reporter

Boeing has decided to locate the new facility where it will build the giant wing of the 777X jet next to its final-assembly plant in Everett, according to people with knowledge of the plans.

The decision, which Boeing management is expected to announce as early as Tuesday, secures for Snohomish County an investment of up to $4 billion and more than a decade of work for thousands of employees who will fabricate the advanced composite-plastic wing.

Boeing will knock down some existing office buildings on its Everett property — where today it assembles the current 777 as well as the 747, 767 and 787 jets — and will also build on property used for employee parking, said the sources.

Boeing on Sunday said only that “the location will be announced at the appropriate time.”

During the nationwide 777X site-selection competition late last year, Boeing projected that the high-tech wing facility alone will provide 2,760 jobs at peak employment in 2024.

When Boeing sought bids from other states for the 777X, it projected the 70-foot-high wing building would occupy 1.1 million square feet and require an investment of up to $1 billion, with up to $3 billion more spent on machinery and equipment, according to a site-selection document viewed by The Seattle Times.

The 777X is to enter service with airlines in 2020, which means it would need to fly for the first time a year earlier. The document said construction of the wing plant needs to start no later than next November, with production of parts to begin in July 2016.

As soon as the Machinists union voted Jan. 3 to accept the concessions demanded by Boeing, the company committed both to assemble the 777X and to build its plastic composite wing in Washington state.

The precise location of the wing plant had been uncertain until now.

Government officials in Pierce County had hoped the Boeing Frederickson facility, which makes the composite tail fins of both the 777 and the 787 Dreamliner, might be chosen.

However, a location close to the Everett final-assembly line was heavily favored because of the immense size of the 777X wing. At 114 feet long and 23 feet wide, it will be the largest Boeing has ever built.

Everett “is the only logical place to do it,” said aviation-industry analyst Scott Hamilton. “How would you transport that wing from Pierce County?”

Still, Boeing’s decision will come as a relief to the Everett workforce.

It means the Everett mechanics who build the traditional aluminum wing of the current 777 jet will have the chance to transition to building the new wing, made from carbon-fiber-reinforced composite plastic.

To make such a wing, Boeing will first use fast-moving, computer-controlled robotic machines to build up the parts of the wing — the long, thin skin panels and the thick I-beam-like spars — by applying strips of epoxy-resin-infused, carbon-fiber tape in layers.

These parts will be baked to hardness in a high-pressure oven called an autoclave. Because of the length of the wing, Everett will need one of the largest autoclaves in the world.

These pieces will be assembled by mechanics similarly to the way an aluminum wing is put together, then rolled out to the nearby final-assembly bay.

Capturing this new technology, which since the advent of the 787 is clearly the future of airplane manufacturing, is the most important aspect of this win for Snohomish County.

The wings of the 787 are built in Japan. But Boeing’s leadership said early in the 777X discussions that it wanted to bring this core piece of the airplane’s technology back in-house.

By the end of the decade, Boeing will likely launch another all-new airplane — industry analysts believe a replacement for the 757 is likely the next move — that will almost certainly be built largely from composite materials.

By then, Boeing’s huge 777X investment in Everett will have created a center of expertise in composites manufacturing that doesn’t exist there today, giving the site a stronger argument it should build that next jet.

Near term, the Everett site must undergo major reconstruction work. In addition to the $8.7 billion in extended tax breaks beyond 2024 that the Legislature promised to win the 777X program, state and county officials have vowed to expedite permitting for 777X-related construction.

People with knowledge of the plans said Boeing will knock down some old engineering office buildings to make way for the wing plant.

For some time, the company has been seeking as much as 100,000 square feet of interim office space nearby to house engineers and administrative staff displaced by the construction work.

And while the wing plant is the main addition, Boeing will also be planning the reconfiguration of its main assembly building to make room for a 777X final-assembly line.

That will likely be in the bay being used for a temporary 787 production line.

Dominic Gates: (206) 464-2963 or

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From: Eric2/19/2014 1:06:06 PM
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Boeing, politicians vow to heal rift with Machinists over 777X

As Boeing confirmed it will build the 777X wing at the Everett assembly plant, company officials and local politicians emphasized the jobs gained and said they’ll seek to soothe future relations with the Machinists union.

Ken Lambert / The Seattle Times

Boeing Commercial Airplanes chief Ray Conner speaks at a ceremony Tuesday announcing that Boeing will build a 777X wing-fabrication plant in Everett. Looking on, from left, are U.S. Sen. Patty Murray, Snohomish County Executive John Lovick and U.S. Sen. Maria Cantwell

Boeing simulation video model of the 777X

By Dominic Gates

Seattle Times aerospace reporter

As Boeing officials and Washington’s political leaders gathered Tuesday to announce that the company’s 777X wing-fabrication plant will be built in Everett, there were clear signs of the upheaval that preceded the decision.

The governor and both U.S. senators were there, but no local officials of the Machinists union, though its members will be major beneficiaries of the thousands of jobs being created.

In the final two months of last year, Boeing played hardball with the union and initiated a multistate bidding process to place the 777X work. Only after a Jan. 3 vote, when the Machinists agreed by the narrowest of margins to major concessions, did Boeing ultimately commit to build the 777X here.

Final assembly was then set for Everett, but until Tuesday it was left unclear where exactly in the state Boeing would fabricate and assemble the 777X’s giant, carbon-fiber composite wing.

At a ceremony inside Boeing’s sparkling airplane-delivery center at Paine Field, Gov. Jay Inslee looked out through the windows at a massive 747-8 freighter jet painted in the colors of the Seattle Seahawks, and declared that “Washington didn’t win one Super Bowl this year. We won two.”

“We beat the Denver Broncos in the Super Bowl,” Inslee said. “But it’s more important to our state that we beat 49 other states to build the 777X and its composite wing.”

All the major players who made the 777X deal happen for Washington state — Boeing executives, a national representative of the Machinists union, and local, state and national political leaders — celebrated the future jobs gained while acknowledging the hard feelings stirred up, especially among rank-and-file Machinists.

Boeing Commercial Airplanes chief Ray Conner stressed that Boeing is making a long-term commitment to the region.

“This is a 50-year decision,” Conner said. “When we make a decision that we’re going to build something here, we’re going to be here. It’s not that easy to pick up and move these things.”

With construction of the 1?million-square-foot wing facility to begin this year on the north side of its Everett assembly plant, “We’re going to start tearing up buildings, and we’re going to start pumping hundreds of millions of dollars right here in this area,” said Conner.

As for the production workers, many of whom felt railroaded into granting major pension concessions, Conner insisted that Boeing still provides “the best pay and benefits in the entire aerospace industry.”

“Hopefully, as time moves on, we’ll be able to heal any wounds that may exist,” Conner added.

No local officials of the Machinists union, the International Association of Machinists (IAM) District 751, attended the event.

Instead, emphasizing the divide that opened up during the 777X drama between 751 and the union’s national leadership, IAM headquarters sent aerospace coordinator Mark Johnson.

The recent nominations for IAM national elections reflected that divide: All four units of District 751 nominated the challengers to the union’s current national leadership.

Johnson said the rift between Local 751 and the national leadership “came out of a split membership” that accepted Boeing’s offer with barely a 1 percent majority.

The IAM national leadership will “do everything we can to make it right with our people,” Johnson said.

The politicians present at the Everett ceremony also had to navigate the narrow channel between celebrating the outcome and soothing the feelings of local Machinists.

U.S. Sen. Patty Murray, while praising Boeing’s 777X commitment of “billions in future investment,” added that the Machinists had to make “tremendous sacrifices.”

Inslee and U.S. Rep. Rick Larsen both lost the backing of Local 751 over their public push for putting the 777X deal to a decisive second vote.

Larsen, who faces re-election this year, said he understands the Machinists’ anger with him. But in the end, Boeing’s 777X selection “is the right outcome for Everett and for Washington state,” he said.

Building the new wing facility will be “a huge boon to local construction jobs” and, once built, it will “secure Everett’s place as the aerospace capital of the world for another generation,” Larsen said.

Everett Mayor Ray Stephanson said he’d make good on his promise to Boeing and ensure that construction permits are issued within four weeks of the company’s applying.

U.S. Sen. Maria Cantwell said Boeing’s 777X decision will make the region a hub of carbon-fiber composite technology. The state needs to follow up by expanding opportunities for training and research in that field, Cantwell added.

She contrasted Boeing’s 777X manufacturing plan with the troubled outsourcing of the 787 Dreamliner.

“The 777X is a story of insourcing,” said Cantwell. “It’s about bringing jobs back home here in America, right here in Washington.”

Inslee defended the concessions made to keep Boeing here — the Legislature’s passing of $8.7 billion in future tax breaks for the company and the Machinists’ agreement to freezing their traditional pensions — as essential to preserve the state’s economic future.

To the community of Washington state, Boeing and its workers are “family,” said Inslee, and when their future is threatened, you have to protect them “by any means necessary.”

Dominic Gates: 206-464-2963 or

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From: Eric2/21/2014 12:39:57 PM
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Boeing offers bonuses to spur 787 catchup in Charleston

To reduce the flow of unfinished 787 work arriving at the Everett final-assembly plant, Boeing dangles a bonus for its South Carolina workers and reorganizes its lagging plant there.

By Dominic Gates

Seattle Times aerospace reporter

Mike Siegel / The Seattle Times, 2009

A North Charleston employee works in the mid-fuselage section of a 787. The mid-fuselage is where the worst production bottlenecks are currenlty occurring.

Boeing is offering a one-time bonus of 8 percent of a year’s pay to workers at the 787 Dreamliner plant in North Charleston, S.C., if they can fix the production problems there within the next few months.

To reduce the deluge of work that has been flowing unfinished to Everett’s final-assembly plant, managers in Charleston also are reorganizing the myriad jobs involved in assembling the jet’s mid-fuselage, where the worst bottleneck is.

And Boeing says it has completed the first step in its campaign to control Charleston’s production problems: rapidly hiring 1,100 workers, many of them skilled contractors, in the past three months.

However, a big backlog has built up. Last week, the mid-fuselage build teams were just shy of 8,000 jobs behind schedule. At recent rates, that’s about 10 days of work.

“There are still a lot of wiring issues,” and efforts to fix that are “taking a lot of manpower and a lot of hours,” said a manager in Charleston.

The most recent fuselage sections delivered to Everett from Charleston are those for Dreamliner No. 178.

Boeing’s latest target, said the manager, is to minimize the work traveling incomplete to Everett by Dreamliner No. 195. That would be within a couple months.

“But to me it still feels chaotic,” cautioned the manager, who, like other employees cited in this story, spoke on condition of anonymity because Boeing doesn’t allow workers to speak without authorization. “I don’t think that will happen by line number 195.”

Meanwhile in Everett, work is still backing up as sections arrive missing not only major wiring bundles but even the brackets that hold the wiring.

According to three people in the factory, work on both 787 assembly lines in Everett slid by two to three days in the past week, despite mandatory overtime through the weekend for many mechanics.

“If parts are not there, you cannot do your job,” said one Everett mechanic. “The whole process has to stop until we go backwards and do what wasn’t done in Charleston.”

Boeing spokesman Marc Birtel insisted that “the 787 program remains on track to meet its delivery commitments” despite “a temporary increase” in the number of jobs behind schedule in Charleston.

He declined to respond to specifics, such as the number of jobs lagging in Charleston.

Birtel said the additional work traveling to Everett to be done in final assembly “is planned and well understood.”

“Traveled work is something we deal with in all production programs,” Birtel said, adding that the Charleston “mid-body team is working to a plan that will result in improved performance, and significantly less additional work (traveling to Everett), in the months ahead.”

Dangling an incentive

Boeing Charleston mechanics build the mid-fuselage and rear-fuselage sections of all 787s. They also do final assembly of some 787s, working toward a goal of assembling three jets per month. The site employs just over 8,000, including contractors.

The bottleneck is the plant where they build the mid-fuselage sections, which are 84 feet long for 787-8 models and 104 feet long for the 787-9 models.

In that plant, workers join the big pieces of the structure, thread wiring, air ducts and hydraulic lines through the barrel, and finish the cabin walls. Each piece of that work is broken down into thousands of smaller jobs.

Since fall, after Boeing stepped up the pace of overall production to 10 jets per month, the mechanics have been overwhelmed.

To keep production flowing, managers have sent the mid-fuselages to Everett with more than 1,000 unfinished jobs per fuselage, adding immense pressure on final-assembly workers here.

To fix that, Boeing is now dangling an incentive: If the workers can get the jobs behind schedule at the entire Boeing South Carolina site below 3,500 by April 30, engineers and managers will get a flat $2,500 and mechanics will get a bonus equal to 8 percent of last year’s pay.

Any jobs that travel to Everett aren’t counted in the bonus calculation. Once an airplane section leaves South Carolina, any incomplete jobs shift from Charleston’s to-do list to Everett’s.

The incentive bonus would be on top of Boeing’s regular annual bonus, which just this month paid the Charleston workforce an extra 18 days’ pay.

If the target is missed in April but achieved by June 30, the bonus paid will be 40 percent less.

If the target is not reached by the end of June, there will be no bonus.

The manager in Charleston said some progress is already apparent, with the mid-body plant now completing 1,000 jobs per day, versus 800 recently.

And last week, Boeing cleared a significant hurdle when the Federal Aviation Administration approved wiring installations on Dreamliner No. 158 in Charleston.

FAA spokeswoman Laura Brown said the wiring inspections just completed on No. 158 were “standard practice” after a wiring design change.

However, the Charleston manager said the process received careful scrutiny because of repeated issues with wires getting nicked during installation, damaging the insulation shielding.

In response, Boeing has shifted doing the wiring work that goes in the crown of the mid-fuselage to a back shop, instead of on the plane.

This wiring is installed on overhead cradles that are then brought into the mid-fuselage, he said.

Boeing managers are also reorganizing the mid-fuselage work, aiming to create a clearly defined package of tasks that has to be done in Charleston, and another reduced set that will travel to Everett — called “intentional” traveled work.

The idea is that Everett will start to get the same traveled work each time — and less of it — rather than the mixed bag of late, said an engineer in Charleston.

The initial goal is to cut in half the man-hours needed to complete the mid-body traveled work in Everett, reducing it from 800 to 400, the Charleston manager said.

In another effort to streamline Charleston, planners are combing through the system to reduce the number of required quality inspections as work progresses.

Quality inspectors will still have final buy-off on all work, but the aim is to reduce the number of inspections along every step of the way, said the Charleston engineer.

Boeing spokesman Doug Alder said this is normal “optimization.”

“Boeing is always reviewing its quality system to optimize the number of inspection points,” Alder said. “We continue to employ rigorous processes, oversight and monitoring.”

Both the engineer and the production manager in Charleston said the problems there are directly traceable to the cutback of skilled contractors last year, just before the pace of 787 production stepped up to 10 planes per month.

“Upper management is starting to see that was a mistake,” said the engineer.

“It’s not for lack of effort by the mechanics,” said the manager. “People here work hard. But there are not enough of us.”

Earlier this month, at an aerospace suppliers conference in Lynnwood, Stan Deal, the Boeing vice president in charge of the supply chain, said work traveling incomplete to final assembly is “not uncommon.”

“We are seeing some bumps along the road in our supply chain,” Deal said. “We’ve got a team focused on that in Charleston…. You manage it. You deal with it. Then you move on.”

Dominic Gates: (206) 464-2963 or

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From: Eric2/25/2014 7:14:43 AM
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Boeing Said to Seek Buyers for $1.1 Billion of Early 787s

By Julie Johnsson Feb 24, 2014 11:15 PM PT

Boeing Co. (BA) is struggling to find buyers for 11 of its earliest 787 Dreamliners valued at $1.1 billion after two airlines dropped orders for the holdover models from the jet’s troubled birth, people briefed on the plans said.

The partially completed planes, which are heavier than new 787s and can’t fly as far, have been parked for about four years near a Seattle-area plant. Black plastic shrouds the windows, and 17,000-pound (7,700-kilogram) counterweights dangle from wings in place of engines to keep the jets balanced.

Boeing began building Dreamliners before getting U.S. certification in 2011, amassing a record inventory that included dozens of older versions requiring extensive repairs to meet federal standards. Chicago-based Boeing is starting upgrades on the early 787s, the last ones to be fixed, as it steps up sales efforts, said the people, who asked not to be identified because the talks are private.

The work shows the “diversion of personnel and resources needed to deal with unprofitable aircraft,” said Richard Aboulafia, an aerospace analyst at Fairfax, Virginia-based consultant Teal Group. “It is a commentary on plans gone badly wrong.”

Boeing’s marquee jet, the first airliner built mainly from composites instead of the traditional aluminum, ran more than three years late while the company worked out kinks with the carbon-fiber materials, onboard systems and a manufacturing process that relied more heavily on suppliers.

Photographer: Patrick T. Fallon/Bloomberg

Workers assemble a Boeing Co. 787 Dreamliner airplane at the Boeing Everett Factory in Everett, Washington

Terrible Teens

The early Dreamliners are known in the industry as the “terrible teens,” a nod to their place in the assembly-line order and the factory woes. The teens weigh more than other 787s due to custom-fitted reinforcements and needed the most work among the more 60 early Dreamliners that required post-assembly modifications.

“We are actively marketing those airplanes and have several available opportunities,” Doug Alder, a Boeing spokesman in Seattle, said by e-mail while declining to elaborate.

Boeing has approached PT Garuda Indonesia (GIAA) and Malaysia Airline System Bhd. (MAS) as well as Latin American and Middle Eastern carriers about the early 787s, said one of the people.

Garuda is considering buying twin-aisle planes and is choosing between Airbus’s A350 and the Dreamliner, a person familiar with the discussions had said earlier this month.

Airline Responses

Russia’s Transaero Airlines opted out of an order for four of the jets in December, three people said, while Indonesia’s PT Lion Mentari Airlines said in January it was switching to Boeing 737s instead of taking five Dreamliners. The sales push also includes two 787s for which RwandAir signed a letter of intent in 2012 and for which no firm agreement has been reached, one person said.

Transaero, Garuda and Malaysia Air didn’t respond to requests for comment. RwandAir Chief Executive Officer John Mirenge said the carrier’s purchase plans aren’t final and that it wouldn’t take any 787s until 2017. The Kigali, Rwanda-based airline has seven planes.

The 787s are the last of those that Boeing mothballed to fix supplier work done out of sequence and to resolve issues that surfaced during flight tests. The faults included an electric-panel fire and structural weakness where the plane’s wings melded with its body, the repairs that spurred the structural enhancements on the so-called teens.

Bargain Hunters

ANA Holdings Inc. (9202), the first commercial 787 operator, and other customers opted to ditch the teens for planes manufactured with the enhancements.

Barring a global aerospace slump, Boeing should be able to place the reworked 787s with bargain-hunting airlines seeking twin-aisle jets to fly shorter, densely traveled routes, said Douglas Kelly, senior vice president for asset valuation at Chantilly, Virginia-based aviation consultant Avitas.

Asia seems like exactly the right place,” said George Ferguson, senior analyst with Bloomberg Industries in Skillman, New Jersey, especially if Boeing targeted sales to potential customers of the re-engined A330 contemplated by Airbus Group NV. “You can see it as a competitor to the A330.”

Buyers would probably pay less than half the current $211.8 million list price of the 787-8 version, Kelly said. The 787 teens have a market value of $115 million each for a single-unit or small lot sale, according to Avitas estimates. Airlines will probably demand 10 percent to 15 percent discounts, bringing the price closer to $100 million, Kelly said.

‘Good Value’

The upgraded Dreamliners will boast the same warranties as new planes, 10 percent fuel savings over Airbus’s A330-200 and creature comforts such as greater cabin humidity and dimmable electronic window shades, Kelly said. Their range will be about 1,000 nautical miles (1,852 kilometers) shorter than later 787s.

For carriers that don’t need to fly 7,850 nautical miles nonstop, as Boeing promises the 787 can do, the teens “still represent a good value,” Kelly said in a phone interview. “It’s just a matter of what price are you going to be prepared to pay for that versus a standard-build 787.”

In addition to the 11 teens, three other Dreamliners used for test flights also await upgrades, according to Flightglobal’s Ascend Online database. Boeing has firm orders for two of the test aircraft and is seeking a buyer for the third, according to a Feb. 14 company filing.

Margin Pressure?

Boeing’s inventory ballooned to $42.9 billion in 2013 from $8.1 billion in 2006 as Boeing parked some jets, provided cash advances to suppliers and invested in tooling for the Dreamliner and a revamped 747-8 jumbo that was also delayed, according to company filings and data compiled by Bloomberg.

Once customers are found and deliveries begin, the high-cost teens may squeeze margins for Boeing’s airplane business and cause unit costs to briefly surge, said Jeff Morris, head of U.S. equities at Boston-based Standard Life Investments.

Investors have moved on to other concerns, like Boeing’s production cadence as it raises 787 output, Morris said. “The market tends to be forward-looking and this is a legacy issue,” he said.

Boeing faces writedowns if it can’t find customers for the unsold 787s, Teal Group’s Aboulafia said. Boeing recorded a $2.7 billion research and development expense after concluding it couldn’t sell the first three 787 flight-test Dreamliners in 2009 because they required “an inordinate amount of rework.”

“It’s good to remove any residual overhang, any doubt that there’s more like that,” Aboulafia said.

To contact the reporter on this story: Julie Johnsson in Chicago at

To contact the editor responsible for this story: Ed Dufner at

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From: Eric3/19/2014 10:41:23 AM
   of 3357
Airbus lags in updating midsize widebody jets, say experts

European plane maker Airbus needs to unveil a serious upgrade to its A330 jet soon or Boeing will dominate the key market for midsize widebody airplanes in the coming decade, analysts said this week.

By Dominic Gates

Seattle Times aerospace reporter

MIKE SIEGEL / The Seattle Times

An Airbus A330-300 flown by Lufthansa.

Airbus officials say that over the past five years Airbus has sold more widebodies than Boeing.

European plane maker Airbus needs to unveil a serious upgrade to its A330 jet within the next six months or Boeing will dominate the all-important and profitable market for midsize widebody airplanes in the coming decade.

That was the stark message from leading aviation analysts this week at the annual U.S. conference of the International Society of Transport Aircraft Trading (ISTAT) in San Diego.

Airbus Senior Vice President Andy Shankland, however, isn’t buying it.

“We get very hot under the collar when we hear the words ‘dominate,’ ‘Boeing’ and ‘widebody’ in the same sentence,” said Shankland in an interview. “Over the past five years, Airbus has sold more widebodies than Boeing.”

But many analysts at the meeting see an urgent need for Airbus to act. Steve Mason, vice president of aircraft analysis at jet lessor CIT Aerospace, said Airbus probably needs to invest the money to put a new fuel-efficient engine on its A330, an upgrade referred to as the A330neo (“new engine option”).

If it doesn’t, he projects sales of the A330 — the highly successful, mid-size twin-aisle jet that seats 250 to 300 people — will inevitably fade within a few years and leave Airbus with no viable plane in that market segment against the 787-8.

The A330, designed in the early 1990s, “is at a crossroads,” said Mason.

For the A330neo to win orders it needs to be available no later than 2018, he said, to take advantage of the fact that Boeing has no open, near-term delivery slots for the 787.

“Airbus needs to make a decision in the next six months,” he said. “If they miss that, it could really damage the prospects of the A330.”

Longtime industry analyst Kevin Michaels, vice president with consulting firm ICF International, agreed.

“At the end of the day, they can’t cede that ground to Boeing,” he said.

Boeing vice president of marketing Randy Tinseth said that even a decision soon to launch an A330neo may be too late for his rival.

“Come late 2015, they’ve got nothing,” said Tinseth. “Even a re-engined airplane wouldn’t come until 2018 or ‘19.”

In contrast, he said, last fall’s launch of the 777X twin-engine widebody — late as that decision was in coming — leaves Boeing with excellent offerings from the smallest to the largest twin-aisle jets.

“We are in a really good place,” said Tinseth.

In a paper released at the conference, CIT’s Mason argued that if Airbus doesn’t change course on the A330, in just a few years it could effectively be reduced to building only A350s in this airplane size category, produced at a rate of no more than 14 jets per month.

Boeing, meanwhile, could be rolling out as many as 24 jets in the same category, including both 787s and 777Xs.

Such an outcome would “put Airbus considerably behind Boeing,” Mason concluded.

Both Delta CEO Richard Anderson and AirAsia CEO Tony Fernandes have called on Airbus to launch the A330neo.

Yet Airbus’s Toulouse-based Shankland tried to tamp down A330neo speculation in his conference presentation.

“There is a lot of discussion of A330 re-engining,” Shankland said, “except in Toulouse.”

In an interview Tuesday, Shankland said the jet maker is analyzing all possible alternatives to upgrade the airplane, but “one should not discount” the option of keeping the A330 as it is today.

That position received the support of Aengus Kelly, chief executive of AerCap — soon to be the world’s second biggest lessor when its acquisition of leasing company ILFC closes.

Kelly said the A330 is so successful now that “If you own the market, why would you bother doing anything else with it?”

For sure, putting a new engine on the A330, which would require also beefing up the wing to hold the heavier new-generation engines, is more complicated than was the successful re-engining of the A320 single-aisle jet family.

That’s because many airlines operate the A330 on relatively short-range flights for a big airplane of less than 3,000 miles. The fuel saving on such routes may not justify the higher price of an A330neo, as they would for operators who fly the plane long distance.

Yet the talk among analysts in San Diego suggests real industry concern that the years ahead could see a widebody-jet market swing toward Boeing.

One senior executive with a leasing company, who asked not to be named because he buys planes from both big plane manufacturers, said an Airbus sales team recently made him a pitch to buy more A330s and succeeded only in raising concerns.

The Airbus pitch was that the A330 could compete against the much lighter and more fuel-efficient 787 by winning on price, compensating for higher fuel costs in operation.

But no airplane lessor wants a manufacturer to offer big discounts, the leasing executive said. That will substantially lower the value of the airplane as it ages.

“That raised the hairs on the back of my neck,” he said. “If they keep the production rate high and lower the price, it becomes a bad investment.”

Steven Udvar-Hazy, now chief executive of Air Lease Corp. and the most respected name in the industry, said he believes Airbus must choose between launching an A330 neo and revamping the plan for the smallest version of Airbus’s new A350 model, the A350-800.

Most industry analysts believe the current A350-800 design is not efficient and likely won’t ever be built without a big upgrade.

Udvar-Hazy said he doesn’t believe it’s rational for Airbus to build both those planes.

“It’s going to be one or the other,” he said. “Certain large airlines are receptive to a re-engined A330 solution that are not receptive to the A350-800.”

“In the end the airline customers will sway Airbus,” he added. “The re-engined A330 is getting more attention. We’ll see what happens between now and the summer.”

Dominic Gates: (206) 464-2963 or

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From: Eric3/25/2014 12:47:21 AM
   of 3357
Analysis of ‘pings’ helped reach conclusions on 777’s fate

Detailed analysis of the time delay and frequency of hourly “pings” to and from a stationary satellite positioned over the central Indian Ocean helped narrow the search for the missing Malaysian Airlines 777.

By Dominic Gates

Seattle Times aerospace reporter

Richard Wainwright / The Associated Press

Crewmen on board an RAAF AP-3C Orion aircraft check radar screens Monday while searching for missing Malaysia Airways Flight 370

Detailed analysis of hourly “pings” to and from a stationary satellite positioned over the central Indian Ocean has allowed authorities to conclude definitively that Malaysia Airlines Flight 370 must have gone down in the southern part of the ocean.

Days after the plane disappeared, analysts at satellite provider Inmarsat used the precise time delay during transmission of those pings to calculate how far the plane was from the satellite, defining two vast circular arcs sweeping across south-central Asia and the Indian Ocean.

Now, an analysis of the shifting frequency of the signals — in the way the sound of a police siren changes as it comes toward you, then speeds away — and comparisons with signals from other planes in the region at the time has allowed the analysts to discount the northern arc and to zero in on a more defined final known position in the southern Indian Ocean, west of Australia.

“They’ve at least been able to narrow down to a fairly localized region” of that southern arc, said Tim Farrar, president of TMF Associates, a Menlo Park, Calif.-based satellite consulting company.

Malaysian Prime Minister Najiv Razak in a news conference Monday said this new analysis confirms beyond reasonable doubt that the plane soon afterward must have run out of fuel and crashed into those waters, and that all 239 people aboard must be dead.

“This is a remote location, far from any possible landing sites,” Najiv said.

Farrar said further analysis of the satellite signals could help narrow the search area further.

It could also help determine whether the plane was traveling for the last part of its journey in a straight line at a constant speed, with no apparent pilot intervention.

If so, that would raise the possibility that the plane was on autopilot before plunging into the ocean, with the pilots — and perhaps the passengers — incapacitated, possibly already dead.

Najiv said the conclusion the jet is lost in the location identified was arrived at “using a type of analysis never before used in an investigation of this sort.”

Tracking via satellite pings

Airliners use a satellite connection while out of radio range over the ocean for voice communication with the pilots and also to carry text messages to the airline operations base via the jet’s data-communications link, the Aircraft Communications Addressing and Reporting System, or ACARS.

ACARS sent its last transmission a half-hour after takeoff. The last radio contact with the plane was 38 minutes into the flight; the jet dropped off radar minutes later.

Even if ACARS was either turned off by someone or ceased functioning because of some system failure, the satellite connection remained.

Just as a cellphone communicates with cell towers so that the network can reach it with an incoming call, the Inmarsat satellite sends an hourly message to the terminal on board the airplane to check that it is still connected.

In response, the terminal sends back a ping to say, yes, it’s still there.

The final ping from Flight 370 was sent at 8:11 a.m. local time, 7½ hours after the jet took off from Kuala Lumpur.

The pings identified the airplane as Flight 370 but contained no direct location data.

Nevertheless, Farrar, who said he spoke with both Inmarsat and the designers of the satellite equipment on the airplane, explained how it’s possible to use the raw ping data to deduce location information.

The time the response ping takes to travel from the plane to the satellite hovering 23,000 miles above the Indian Ocean varies according to the distance the signal must traverse.

The satellite recorded at what point in the predetermined transmission time slot the ping from Flight 370 arrived, and so established how far away the jet was.

It was this data that persuaded the Malaysian authorities, a week after the plane disappeared, to reorient the search toward two arcs in a large radius around the satellite.

One arc swept north over land into Central Asia, the other south into the remote southern ocean.

Not totally stationary

Subsequent analysis used the fact that the Inmarsat satellite is not perfectly stationary in its orbit.

Although it is fixed on the 64-degree east line of longitude, the satellite moved slightly from north to south of the equator during the jet’s flight, which means it was moving away from jets in the Northern hemisphere and moving toward jets in the Southern hemisphere.

The Doppler effect — the same phenomenon that changes the pitch of a siren as an ambulance moves toward, past and then away from a listener — enabled analysts to determine whether the plane is moving toward or away from the satellite as it pinged.

The frequency of the Flight 370 signal told analysts it was in the southern arc, not the northern.

By comparing the signals from other planes in the sky at the time that were pinging the same satellite and whose position was known, they were able to further narrow the jet’s possible location, Farrar said.

The search remains daunting. The area where it will now be concentrated, toward the southern tip of the original search arc, is still many tens of thousands of square miles.

Dominic Gates: (206) 464-2963 or

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