Russian airline Aeroflot has cancelled their order for 22 Boeing 787 Dreamliners, raising concern over production rates.
The order was placed in 2007 and consisted of 18 787-8 Dreamliners and four of the medium 787-9s, a total list price value of $5.5 billion.
First reported by the Seattle Times the cancellation puts an end to the great uncertainty that has been around since 2015, when Aeroflot said they didn’t need the aircraft.
For Boeing, discussions about future production rates will depend on their backlog, which is dwindling rapidly. Boeing has total orders for 1,450 787 Dreamliners, of which 894 have been delivered.
Unless Boeing secures orders for a considerable amount of aircraft by 2022, production rates will have to be cut to ensure production stability for the current remaining 556 to be delivered.
Across two manufacturing sites in the United States, Boeing builds 14 787 Dreamliners monthly. With the 737 MAX battling its own issues, the 787 is now Boeing’s primary revenue stream.
Despite this, Boeing is facing considerable pressure to reduce an overhang of deferred accounting costs, accumulated during the development of the 787, by producing more aircraft.
Complicating this situation is the weakened demand for large widebody aircraft such as the Boeing 787, 777 and Airbus A330 and A350.
Trade disputes, an unpredictable global economy and narrow-body aircraft that can fly longer than ever are drastically effecting how many sales both Boeing and Airbus can make.
Boeing Chief Executive, Dennis Muilenburg, said the company has allocated slots in the 787 and 777 production lines for potential orders from Chinese customers, however trade disputes have hindered these plans.
Although it is not certain if these Chinese orders will surface, Boeing is hoping for the best with ongoing political discussions between the United States and China.
Citing Reuters, industry sources have also commented on Airbus’ performance; stating that they have some gaps in their A330neo line and to a lesser extent, their A350 line.
Airbus and Boeing both deny suggestions of aircraft being offered at far lower prices than catalogue value, however analysts have come to the opposite conclusion.
Some good news can be pulled from this situation though; Boeing’s figures show they have locked in an order from Air New Zealand for eight of the largest Dreamliner model, the 787-10.
Still, a lot of work needs to be done to secure the production line; perhaps the upcoming Dubai Airshow will see some orders places.
What are your thoughts on this situation?
There has been more cancellations at Boeing for the 787-9 that no one seems to be talking about and it’s being kept under the rug. Hainan which had taken an order originally for Hong Kong airlines has now cancelled the entire order after Boeing had built most of them. Thus prompting Boeing to paint one in the Boeing Dreams take flight livery as a distraction. Boeing in a panic is giving out bargain of the century by selling them of at a fraction of the original price. One being picked up by Indian Vistara and two will be going to Biman Bangladesh Airlines. Yes these are 787-9s going to Biman on top of their original 4 787-8s
Look like bad time to be Boeing tainted reputation, cancelled orders and now have to pray the trade wars end sooner not later.
Kinda ironic that Boeing tried so hard to make sure Bombardier C plane will not sell in US now it sells really well elsewhere. Plus with the 737max fiasco it’s obvious many airlines will choose that C plane which is now A220. I guess karma hit Boeing really hard.
A sign to order IL-96-400M? :’)
Boeing seems to be in a precarious position. 737 MAX deliveries are on hold even though production continues, which uses up working capital. The 787 backlog is dwindling. The trade war with China means there are unlikely to be major Sino orders with Boeing anytime soon. WTO tariffs and retaliatory tariffs with Europe over Airbus subsidies will likely hinder sales there. And yet, Boeing must either launch the NMA (which will require billions more in investment) or cede market share to Airbus with its A320/321 neo family. Lawsuits by families of victims the 737 MAX crashes have yet to go to trial (or be settled). Boeing had best hope that military orders can provide it with enough profits and cash flow to cover for the worsening commercial side.