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Boeing's issues with 787, including SC-made jets, have 'mushroomed,' says Air Lease

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Boeing 787

Production issues with Boeing Co.'s 787 Dreamliner jet have led to delivery delays, and the planes have piled up in inventory as customers wait for their aircraft. File/Grace Beahm Alford/Staff

The production issues plaguing Boeing Co.'s Dreamliner program "seemed to have mushroomed" with no end in sight, the top executive of a major aircraft leasing company told investors this week. 

Air Lease Corp. CEO John Plueger said during a Feb. 22 earnings call that the nonconformities the planemaker found last year in the 787 have led to longer delays than his company had anticipated.

Plueger described "greater and greater levels of inspection going on" and said it was "difficult to see a definitive fix that is agreeable by the aviation authorities and all going forward."

Dreamliners made in North Charleston and Everett, Wash., have been under inspection for several months as Boeing looks for flaws and reworks them as necessary.

The South Carolina plant is taking over all 787 assembly in March, but, given the inspection work still left to do, workers in Everett will continue to assess the jets made at the Seattle-area plant. Boeing also has established a site in Victorville, Calif., to check Washington-made Dreamliners.

The company hasn't reported a 787 delivery since October, and dozens of newly built widebodies have been piling up in inventory. About 80 were waiting to be handed over to customers as of late January.

The process, according to Plueger, "has been dragging on longer than any of us have imagined."

The delays have Los Angeles-based Air Lease waiting for planes it ordered. They include some 787 deliveries that have been pushed back for 12 months, the point when the company and its customers would have the right to cancel.

"So suffice it to say, we're working with those impacted customers and we will take action ... based upon what those customers want to do," Plueger said. 

When Boeing first disclosed the 787 production issue, it said it was specific to one part of the fuselage. By late 2020, the scope of the inspections was expanded to include all areas where fuselage segments are joined together. Suppliers were also asked to do their own checks.

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Boeing has said the flaws, which are deviations in what it called "very tight tolerances" for the flatness of the aircraft skin, don't pose an immediate flight risk. CEO Dave Calhoun has defended the decision to put the planes through the lengthy inspection process. 

During a Jan. 27 earnings call, Calhoun told analysts and investors that this was a moment to "fix some things and do some things the way (they) would like to do them." 

Calhoun also warned that "few, if any" 787s would be delivered in February. 

Without a clear resolution in sight, the Air Lease CEO said he's "waiting for more definition from The Boeing Company" on what appears to be an "unfolding story."

"I wish I could say that we knew definitively there was an end to it and when things would start," Plueger said. 

Troubles with the 787 also came up during the Feb. 23 earnings call for Kansas-based Spirit AeroSystems, which makes aircraft parts, including the Dreamliner's forward fuselage sections. 

Spirit CEO Tom Gentile said the biggest impact on the Wichita company's 787 business has been the reduced production rate.

Boeing is dropping 787 output to five planes a month in coordination with the North Charleston consolidation plan, which has been pushed up to next month from the original projected date of mid-2021. 

Gentile and Spirit finance chief Mark Suchinski said they expect to ship at a schedule set for the five-per-month rate for the rest of the year. They also projected Boeing's goal will be to resume building seven or eight 787s a month, or roughly half the program's peak rate of 14. 

The drop to five per month was reached after several previous 787 production cuts announced before and after the COVID-19 pandemic, which has crushed demand for new commercial airplanes.

Boeing South Carolina spokeswoman Libba Holland said the company had no updates on Dreamliner rate plans or deliveries.

Reach Emily Williams at 843-607-0894. Follow her on Twitter @emilye_williams.

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