Boeing CEO: 'Highly Confident' in 787 Battery Fix
The Federal Aviation Administration did "everything right" in the dealing with the battery issues that grounded Boeing's new 787 Dreamliner for months, the aircraft maker's chairman and CEO James McNerney told CNBC on Monday from the Paris Air Show.
He said in a "Squawk Box" interview that he's "highly confident" in the overhauled lithium-ion batteries. "We re-examined the technology as we learned more," he said. "We have a very robust fix and a next generation battery system that, I think, will serve this airplane well for the future and other generations of airlines."
In January, the FAA launched its review of the lithium-ion batteries in the 787s after one caught fire in a parked Dreamliner in Boston that month. A second battery overheated and smoked during a flight in Japan about a week later—prompting regulators to ground the worldwide fleet for four months, while Boeing altered and recertified the battery system. The 787s went back into service last month.
The battery problem has not affected Boeing's delivery guidance of at least 60 787s this year, McNerney added. "[It] will not impact our delivery stream because we kept producing as we went through the fix." There could be some upside to that forecast, he said.
"We [also] have a product line that is unsurpassed. We've got more choice in the wide-body space," he said, referring to, what he believes is, the value-proposition of Boeing over its rival Airbus of Europe.
But Carter Copeland, aerospace and defense analyst at Barclays Capital, told CNBC from Paris on Monday that it doesn't have to be either Boeing or Airbus. "Demand of customers are differentiated enough on the wide-body market. ...From an investors' perspective, both companies could actually produce sufficient numbers of airplanes ... to make a lot of money," Copeland added.
McNerney furthered his case, saying: "We have more new technology embedded in all the offerings. All the pain and suffering from the 787—all those technologies are now moving to the 777, are moving to the next generation derivatives of the 787."
One of those Dreamliner derivatives is the 787-10X—the largest version of the aircraft. "Demand is very strong" for that yet-to-be-released the jet, McNerney said. "You won't have too long to wait" for its roll-out.
GECAS, the aircraft leasing arm of General Electric, has committed to buying 10 of the 787-10X models. GECAS said it would take delivery of the aircraft, valued at $2.9 billion based on list prices, between 2019 and 2021.
These big orders aside, McNerney said, "we're responding to a marketplace that is a more-for-less world. ... There's a fair amount of pressure."
The defense and aerospace side is being affected by the troubled "finances of most developed countries around the world," he said. "[It's] a slow-growth economy on the commercial side." Boeing is "working with [its] suppliers to share both the benefits and share some of the pain in dealing with that world," he said.
Meanwhile, with oil prices creeping higher again, McNerney said, "I think most airlines and most industrial concerns are sized for $100 to $120" a barrel crude. But "you get to a point where the economy is ruined" by spiking energy costs. "Who knows where that is: $150 [a barrel oil], $160? I don't know."