October 24, 2012
Despite the customary “price pressure” of introducing an updated model against strong competition from the Airbus A320NEO, Boeing is seeing a payoff from the improved fuel technology offered in its re-engined 737 MAX from customers who are willing to pay a premium above current models to get it, Chairman and CEO James McNerney says.
“We are getting paid for the new technology that we are putting into the airplane,” he said. “Customers are recognizing the value that they are getting with this new airplane.”
McNerney spoke Wednesday during a third-quarter earnings call in which the company reported revenues of $20 billion, a 13% gain from the same period in 2011.
The MAX has recorded 858 firm orders, many of them conversions from the current 737 Next Generation series, and continues on schedule to achieve its firm design configuration in 2014 and service entry with Southwest Airlines in 2017. McNerney says the company’s $307 billion backlog has been fueled by MAX orders. “We expect a continued flow of order traffic to year-end,” he says.
The company is on track to meet its target of 585-600 deliveries in 2012, including 70-85 787 and 747-8s after a slow start in the first half. Five 787 deliveries have been made in October and 28 so far for the year.
About half of the 787 deliveries are directly off final assembly lines, and the other half comes from aircraft reworked to make up for production flaws or missing parts.
Engineering work on the stretched version of the 787, -9, is about 90% complete. Major assemblies have begun, and the program remains on track for its first delivery to Air New Zealand in 2014.
Although the company is still not committing to production of a 787-10 model, which would be sized for shorter-haul operations, McNerney said Boeing has a “suite of technologies that we can harvest over the next decade” to apply to the -10 and its other big looming project, the 777X.