Executive Briefings

Boeing Continues to Live Dreamliner Money-losing Nightmare

Amid all the fine financial news Boeing can tout - a record order backlog, robust profit margins, a higher profit outlook - one of the airplane maker’s dreariest performers continues to be its highest-tech, most fuel-efficient product: the 787 Dreamliner.

Boeing continues to lose money on each Dreamliner it builds. The company expects to reach the break-even point on some models turned out by its 787 program in 2015. In the most recent quarter, production costs rose again for the 787, which has become one of Boeing’s most popular models due to its lightweight carbon composite airframe and the resulting lower fuel burn. The program’s deferred production cost, an accounting measure of how efficient an assembly program becomes over time, rose 4 percent, to $25.2bn, in the third quarter, topping the $25bn cap Boeing had forecast for the 787 program.

Of course, Boeing officials insist the 787′s assembly costs will continue to drop over time as workers improve the efficiencies of the line and the rate at which they can build new planes. But the airplane—which suffered several delays before its 2011 introduction and then a grounding due to battery fires—remains a critical drag to the commercial airplane division’s financial performance.

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Boeing continues to lose money on each Dreamliner it builds. The company expects to reach the break-even point on some models turned out by its 787 program in 2015. In the most recent quarter, production costs rose again for the 787, which has become one of Boeing’s most popular models due to its lightweight carbon composite airframe and the resulting lower fuel burn. The program’s deferred production cost, an accounting measure of how efficient an assembly program becomes over time, rose 4 percent, to $25.2bn, in the third quarter, topping the $25bn cap Boeing had forecast for the 787 program.

Of course, Boeing officials insist the 787′s assembly costs will continue to drop over time as workers improve the efficiencies of the line and the rate at which they can build new planes. But the airplane—which suffered several delays before its 2011 introduction and then a grounding due to battery fires—remains a critical drag to the commercial airplane division’s financial performance.

Read Full Article