The Boeing Company - General Discussion

However, one of the world’s largest lessors, Air Lease Corporation, has another take on the situation. Speaking at the lessor’s earnings call yesterday, CEO John Plueger said that, before Boeing embarks on any new aircraft project, it needed to get its current products in order. He said,

“We want Boeing to … get its house right, to get its house in order. The 787 delays are impacting us, as well as the rest of the delivery, the manufacturing process. Boeing has gone through a tremendously difficult time and while they certainly have made a lot of progress, the blunt truth is we need them to fix the remainder of their house first before we have any interest in talking about new aircraft.”

...While ALC cited both the previous issues with the MAX and the ongoing problems with the Dreamliner products as headaches it is tired of dealing with, Plueger noted that the 787 is by far the most pressing issue now. He said:
“It’s clear that the production issues that have arisen on the 787’s seemed to have mushroomed, and there’s just greater and greater levels of inspection going on due to the non-conformity findings.”

The issue, he said, is not so much that the 787 is undergoing inspections which are impacting operations and deliveries of the type, but that there seems to be no clear path out of the situation. He continued,

“It is difficult to see a definitive fix that is agreeable by the aviation authorities going forward.”

He noted that, because the issues raised with the current fleet of 787s are very difficult to fix, the only way forward will be to ‘use-as-is.’ He said this would mean engineers and authorities agreeing that the machining issues on the Dreamliner fleet do not negatively impact safety and therefore the aircraft can be flown regardless.

Air Lease noted that the ongoing delays to deliveries of the 787 mean some are now passing the 12 month contract period for pain-free cancellations of the order. Although none have yet, this does open the door for Boeing customers to bolt from their contracts without penalty. Plueger noted,

“This has been dragging on longer than any of us have imagined. In fact, I don’t think Boeing has delivered a 787 to anyone since the end of October. So we have … a number of aircraft waiting, and yes, some of them are coming up on their 12 months, and some have already passed the 12-month point past delivery.”

Well, we've been working very closely with Boeing, in terms of trying to understand, the whole production system and doing the analysis that they have requested. Our understanding is they're also doing analysis in other sections of the aircraft, but those are not really visible to us. So we're focusing on our work package with Boeing. And what we're doing is based on feedback that they've gotten from their own investigations in other parts of the aircraft. They've asked us to perform similar engineering analysis on the sections that we do. And we're doing that analysis. We are working with them to understand the results.

In some cases, it may require rework. We have started some rework just so that, they can resume their deliveries sooner. And as we get all of the engineering analysis done, we'll determine in the long term, what type of rework is done. But this is -- the type of thing that happens is you identify a potential issue. You do the engineering analysis and you understand whether the area is acceptable as it is or if it could require some rework.

In addition, to the extent that we need to change some of our production process in the future, we will do that. We're learning a lot from this engineering analysis in terms of things like tools and processes. And we will make any improvements that we think are necessary as a result of that analysis going forward.