Boeing announced changes to its production line for 2016 with a focus on narrowbody over widebody aircrafts.
Boeing – Widebodies
747-8 production will be reduced by 50% from 1 to 0.5 aircrafts per month by September 2016. This translates into 6 aircraft per year. As part of this reduction, the company will take a US$569 million after-tax charge (US$0.84 per share) when it announces financial results for the fourth quarter of 2015.
“Global air passenger traffic growth and airplane demand remain strong, but the air cargo market recovery that began in late 2013 has stalled in recent months and slowed demand for the 747-8 Freighter,” said Ray Conner, Boeing vice chairman and president and CEO of Boeing Commercial Airplanes. “While we remain confident in the 747-8’s unique value-proposition and an upcoming replacement cycle for late-model 747-400 Freighters, we’re taking the prudent step to further align production with current market requirements.”
As the 777X program marches forward (Insight – August 28, 2015), existing production goes down from 8.33 to 7 aircrafts per month (~17%). Yearly production will go from 100 down to 84.
As the 777Xs draw near, airlines are less likely to buy existing versions that are significantly discounted. They also have the option to pick up older 777s in the secondary markets should passenger demand arises. This lower production trend will likely continue until after 2020 when the first 777X is in service.
Boeing is catching up its existing 777 order book with deliveries. All existing orders are for 777-300ER (passenger) or 777-F (freighter). Based on delivery timelines, some airlines whose aircrafts are not in the production line may chose to change its order to the 777X variants when the time comes.
Boeing – Narrowbodies
The 737 program will celebrate 50 years of delivery in 2017. Boeing has delivered 8,845 with another 4,392 aircrafts unfilled at the end of 2015. With such a big order book, Boeing will increase production from 42 to 57 aircrafts per month from 2016 to 2019. This is a 36% increase in production and will translate into upwards of 684 aircrafts a year. Boeing will monitor production rev up and may add more capacity.
The most updated version dubbed 737-MAX 200 was launched in September 2014 with a mega order from Ryanair (News). The MAX 200 series is the high density of the 737 MAX 8 that can carry up to 200 passengers in a one class configuration.
The first 737 MAX aircraft completed final assembly at the end of 2015. It will start testing and certification process on January 29, 2016. The first delivery is scheduled for Q3 2017 to Southwest Airlines (news).