Boeing Seeks New Heights in 2010
CNBC Auto and Airline Industry Reporter
After years of planning, waiting, and yes, delaying some of the most important programs in its history, 2010 is the year when Boeing will see if it can finally deliver.
This year is a milestone year for both the commercial and military side of the company. Each has done well in recent years, but for investors, the focus is no longer on some year in the future, it's this year.
Here are three of Boeing's key priorities:
This is the big one for Boeing . Delayed more than two years, the first Dreamliner is scheduled to be delivered by the end of this year to the Japanese carrier ANA. The delays have cost Boeing by adding to the development costs of the airplane and giving some investors reason to pause over the last two years.
That said, the Dreamliner is still a blockbuster, even before the first one goes into service. More than 850 have been ordered. The backlog goes out to 2018. And if the plane delivers on the expectations Boeing has set up (20 percent more fuel efficient, with technology and a cabin that will enhance the flying experience), you can expect orders to pick up in the years to come.
The question now is whether Boeing can get all the flight tests done and get the plane certified for delivery by the end of this year. One analyst estimates Boeing may be running a month behind schedule, but the company maintains it will meet the deadline it has set.
If the 787 is delivered on schedule and there are no major snags along the way, Boeing will clear a huge hurdle. Then, the challenge will be ramping up production of the plane to ten a month by 2013. Getting there will depend in part on whether Boeing can get a second assembly facility up and running in Charleston, South Carolina.
And then there is the question of whether Boeing's global supply chain, with partner companies spread around the world, can run smoothly at a higher production rate. On paper, it should work. In reality, Boeing still needs to show it can meet its commitment.
Ordinarily, the largest commercial airplane Boeing has ever designed would be a major deal and get tons of attention, but the 747-8 is flying in the shadow of the Dreamliner. Need proof? When the Dreamliner made its first flight last December, the runway was lined with scores of reporters and photographers from around the world. (Watch video of the landing below.) A few months later, when the 747-8 made its maiden flight, the media contingent was far smaller.
While the 747-8 lacks major buzz, it's still an important plane for Boeing. One reason why: the majority of the stretched versions of the 747 ordered are for the freighter version, and freighter planes just aren't sexy.
For airlines that order the 747, the plane offers seating for up to 467 passengers and, according to Boeing, the plane will use 11 percent less fuel per passenger than its competitor, the Airbus A380. It also will incorporate some of the technology going into the Dreamliner. Like the 787, the first 747-8 is scheduled for delivery later this year.
Military Refueling Tanker
Talk about a story that seems like it will never end. Like a good novel, it's had a little bit of everything: A falling out between long time partners (Boeing and the Pentagon); the lingering stain of scandal (remember, Boeing's reputation in Washington was trashed after the company's former CFO was thrown in jail when it was learned the company got preferential treatment on military contracts in exchange for an Air Force procurement officer getting a future job at Boeing); and a dose of patriotic fervor as Boeing battles Airbusparent EADS for the contract.
All of this explains why the refueling tanker story seems to go on and on. But the Pentagon says it will decide who wins the contract by November.
And a lot is at stake. At least $35 billion for 179 refueling tankers. But it goes beyond money. For Boeing, winning the tanker would mean holding a major military plane project at a time when there are fewer of those out there.
So, for the military side of Boeing's business, this is the big enchilada. It's a contract Boeing won, then lost, and now has a chance to win again. Will Boeing get the storybook ending that comes with every great novel or will the company fall short on one of the biggest Defense Department deals to come along in years?