Boeing 787 unfinished work drops 30 percent

Boeing South Carolina handles every aft and midbody fuselage section for the 787-8 and 787-9. It also assembles the slightly smaller "Dash 8" model.

The amount of unfinished work on the Boeing 787 Dreamliner declined significantly during the second quarter of 2014, a company official said Wednesday during an earnings update.

"Traveled work has declined by 30 percent since this time last quarter," finance chief Greg Smith said.

Traveled work consists of parts that remain uncompleted at one location when they are scheduled to be shipped and require finishing at another site.

That was a huge problem for the North Charleston campus earlier this year, when workers couldn't meet assembly time lines and were sending too many unfinished 787 fuselage sections to Everett, Wash. Boeing had to bring in contract workers to beef up production and get the program back on track.

Since then, the North Charleston campus met its goal of producing three 787 Dreamliners a month by midyear, and the aerospace giant is now producing 10 a month to catch up on a backlog of nearly 1,000 orders from 60 customers around the globe. Seven a month are produced in Everett, the hub of Boeing's aircraft-making operations.

The company still expects to deliver 110 787s this year, Smith said. It has delivered 48 so far this year, including 30 during the April through June quarter.

"We are stable at 10 a month and continue to stabilize our production system in all areas of assembly," Smith said.

In 2016, Boeing plans to speed up 787 production even further to 12 a month and, by 2019, to 14 a month.

With its higher production rate, Boeing's cash flow improved in the second quarter and costs have come down on the 787, but Smith said the company will work to reduce them further.

Boeing delivered 181 airplanes during the quarter, including its first 787-9 to Air New Zealand. It also delivered its 8,000th 737 during the period.

The company manufactures and modifies aft and midbody fuselage parts for the 787-8 and 787-9 in North Charleston beside Charleston International Airport, where it also assembles the slightly smaller "Dash 8" model. Boeing will begin piecing together the first South Carolina-made 787-9 this fall.

The company said its second-quarter earnings soared 52 percent on increased deliveries of commercial aircraft over the same period a year ago, while revenue rose 1 percent to $22 billion.

For the second quarter, Boeing earned nearly $1.7 billion, bringing its 2014 profit so far to $2.6 billion, up 19 percent over the first six months of 2013.

"With 783 new commercial airplane orders to date this year and significant contracts in the quarter for military aircraft and satellites, our backlog remains large and diverse," CEO Jim McNerney said.

The aircraft-maker's total backlog of orders for all commercial aircraft stands at more than 5,200, valued at $440 billion. The company booked 264 commercial aircraft orders during the second quarter.

Orders for 201 aircraft valued at $40.2 billion during the Farnborough International Airshow in England, which ended Sunday, will appear in third-quarter results.

Earlier this month, Boeing predicted nearly 37,000 new aircraft will be needed over the next two decades, mainly for single-aisle aircraft in developing nations such as China.

In a conference call Wednesday, McNerney said demand for replacement aircraft has not been this strong since the 1950s when the former 707 was introduced to offer the largest passenger cabin in the air at the time.

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