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?