787 Getting Off the Ground?

Tags: ba, noc, ge, gr, cr, col, rti, lmia, ldsh, tgi, aa, dco, dasty
18 Dec 1:45am
Posted by ZacksResearch
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Some observers wonder if the 787 Dreamliner airplane will ever fly. Not to worry! Years ago, this writer was employed by Northrop Corp. -- now Northrop Grumman Corp. (NOC) -- which, at that time, was struggling to produce the 747 fuselage as a risk-sharing partner. The problem became so onerous financially that The Boeing Company (BA) revised its agreement with Northrop, which became a sub-contractor and went on to produce many 747 fuselages.

A similar thing has already happened with Vought (VTC), one of the original risk-sharing partners on the 787; in this case, Boeing has taken over Vought's 787 operations.

Boeing has the resources to make the 787 successful; however, the program obviously is not going to turn out the way Boeing originally envisioned. In the Aerospace Industry, one has to be flexible!
 
Over the past few months, many of the suppliers on the 787 have taken action to cope with the latest slippage in that program. To give the reader some feeling for the scope of the 787 program -- and the management problems associated with it -- the following is a compendium (albeit abbreviated) of some of Boeing's original first-tier suppliers on that program: Alcan Aluminum, Alenia/Vought, Ametek (AME), Bridgestone, Chengdu, Crane (CR), Dassault Systemes (DASTY), Ducommun (DCO), EADS (EAD), Eaton (ETN), Fuji, General Electric (GE), Goodrich (GR), Hamilton Sundstrand (United Technologies {UTX}), Honeywell (HON), IAI, Kawasaki, Kidde, Korean Air, Korry (Esterline Technologies {ESL}), Labinal, LMI Aerospace (LMIA), Messier-Bugatti, Messier-Dowty, Michelin, Mitsubishi, Monogram, Moog (MOG.A), Parker-Hannifin (PH), PPG (PPG), Rockwell Collins (COL), Rolls-Royce, RTI (RTI), Saab, Shenyang, Sierracin, Smiths, Spirit (SPR), Thales, Toray, Triumph (TGI), Woodward Governor (WGOV) -- plus many others.

Further, there are a slew of companies that are suppliers to these companies -- Alcoa (AA), Ladish (LDSH), Precision Castparts (PCP). The point is that the 787 is a complicated undertaking which is fraught with unfortunate possibilities.

To our knowledge, only Vought, part of Global Aeronautica, no longer is a risk-sharing partner; one failure out of so many suppliers is not a bad track record. While Boeing was way too optimistic about how well this far-flung team would function, it has too much at stake to let this airplane fail...even though it does falter from time to time.

Obviously, it is still too early to know if more delays are in the offing; for now, all we have to go with is the expectation that deliveries of the 787 will probably begin in the summer of 2010. By then, maybe the airlines will (1) need the airplane and (2) be able to get financing. In the meantime, the industry will have to adjust -- just like it had to do with the Airbus A380. Commercial aerospace is a risky business, but once you're off the ground, the rewards can be generous.

Read the full analyst report on NOC.

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Read the full analyst report on MOG.A.

Read the full analyst report on TGI.

Read the full analyst report on LDSH.

Read the full analyst report on PCP.

 

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