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787 to top agenda for new Boeing CEO

Yesterday's (June 23) announcement that Dennis Muilenburg will become Boeing’s new chief executive marks the start of a new era for the OEM as it looks to build on the achievements of Jim McNerney, who is stepping down after 10 years. Muilenburg, a 30-year company veteran and its chief operating officer, will take over from McNerney on July 1. McNerney, who will retire after a transition period but remain as Boeing chairman, has been credited with restoring the OEM’s competitiveness during his tenure. Certainly, Boeing is a stronger company now than the one McNerney took over, with revenues up from $52.5bn in 2004 to $90.8bn last year, 70 per cent of which was generated by commercial aircraft sales.

Looking at Boeing’s commercial division,taking forward the 787 programme is sure to be near the top of Muilenburg’s agenda. Despite conquering many of its technical challenges in recent years, Boeing still has around $30bn in deferred production and tooling costs, a figure it admits could continue to rise into next year.

These costs, according to Boeing, will only begin to decline once the 787’s production rates are raised from 10 to 12 aircraft per year, something scheduled to happen in late 2015.

The 787’s high manufacturing costs mean that each of the 30 aircraft that left the Everett, Washington facility for delivery in Q1 2015 cost the company around $26m.

There is also the issue of meeting the 737’s production ramp up; following last October’s announcement that Boeing will raise production of the narrowbody aircraft to an unprecedented 52 per month by 2018 to match the A320 production rate.

Of course, there is also the not so small task of overseeing Boeing’s entire outstanding commercial aircraft order book, which stands at more than 5,700 aircraft with a value of around $435bn.

While Airbus remains its biggest competitor, the entrance of new aircraft programmes in Russia and China could bring new challenges in those regions.

Despite the issues Muilenburg and Boeing must confront, the progress on the commercial side of the business under McNerney sees the firm in an enviable position.

 

TAGS: Airframes
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