MIAMI — The commercial aircraft market remains very strong for both narrowbody and widebody jets, with strong traffic and strong economics of the aircraft Boeing is offers, said Greg Smith, the manufacturer’s CFO and executive vice president of business development and strategy at the JP Morgan Aviation, Transportation and Industrials conference earlier today.
“There’s the replacement and growth markets for new aircraft,” said Smith. “Despite low fuel prices, there’s still a compelling case for fuel-efficient jets like the 737MAX and 787. Like the 787, which is opening new routes that weren’t available before. We want to build on that success in the marketplace.”
Boeing is continuing its focus on developing the 777X, 737MAX and 787-10 jets, said Smith. “We are leveraging the technology we’ve already invested in and are using it on new platforms,” he said. “It’s a way to reduce risk and volatility in research and development, getting products in the hand of customers in an economic and affordable way,” he said.
Demand still remains strong, and Boeing continues to maximize productivity, said Smith. “We’ve moved production up for the 737 from 47 to 52 planes a month by 2018,” he said. The current production rate for the 787 is 10 a month, with rate increases to 12 a month in 2016 and 14 a month before the end of the decade.
When discussing the correct production rates, Smith said many factors are taken into consideration. “As we think about this, we look at airlines’ demands, like firm orders, options, growth and replacement,” he said.
Coming forward, the market is 50-50 growth and replacement aircraft, said Smith. “I wish I could see what’s coming ahead. But we go airline by airline and airplane by airplane,” he said. “And they are pretty dispersed around the globe.”
Again, it gets back to what each aircraft brings to the marketplace and the customer, said Smith. “Our customers are healthy and more profitable than they’ve ever been. That’s good for the industry overall.”
On the 777 production line, Smith said it’s been a great platform for many years, without much competition. “We had a good year last year, with 63 orders. We’re sold out this year, mostly sold out next year and half sold out in 2017, so I don’t see the need to make adjustments at this time,” he said. “And in transitioning the 777X onto the 777 line, we’re taking lessons learned on 737 line. It’s a great product and we have time on our hands to fill in that bridge.”
Looking ahead, Boeing has additional fleet support as the 787s continue to enter the market, said Smith. “We want to make sure that goes as smoothly as possible,” he said. “Research and development costs will be higher this year for the 737MAX and the 777X, and we will continue to use best practices at our other programs.”