Despite its rocky introduction into service, Boeing’s 787 Dreamliner has become so reliable that it is costing money for parts suppliers.
Both Rockwell Collins and United Technologies Corp. said in earnings calls this week that demand for 787 spare parts has been so far below what they had expected that it has hurt their revenue from commercial aftermarket sales.
UTC had expected parts sales to go up 10 percent, partially from continued strong demand for 787 parts, the company’s Chief Financial Officer Akhil Johri said Wednesday during a conference call with investor analysts and reporters.
“It’s looking more like we will probably be down roughly 40 percent on the 787 portion of the provisioning” of spare parts, he said.
Overall, the company has seen a 10 percent decline in commercial aftermarket sales for all airplane models it supplies. In addition to Dreamliners’ improved dependability, airlines have stockpiled replacement parts for other airplane models, he said.
Rockwell Collins, which makes the large digital displays in 787 cockpits, saw aftermarket sales revenue drop $3 million “to $225 million due to lower spares provisioning for the Boeing 787 program,” CFO Patrick Allen said.
The decrease was actually bigger, but it was softened by higher sales driven by regulatory mandates, he said.
While 787s are becoming more reliable, aftermarket sales were also down because fewer airlines took delivery of their first Dreamliner last quarter. New operators stockpile parts before adding an airplane model to their fleets.
The drop in sales is good and bad news, Rockwell Collins CEO Robert Ortberg said.
It has pinched revenue, but “it’s because our products are performing very well in service, and are exceeding even our reliability expectations,” he said.
Most new airplanes have teething problems when airlines start flying them with paying passengers on board. A common industry measure is called dispatch reliability. It measures how often an airplane leaves its airport gate more than 15 minutes behind schedule for technical reasons. Most commercial jetliners are above 99 percent.
When the 787 went to work, its dispatch reliability was about 96 percent. It “is currently pushing 99 percent” and continuing to improve, said Tom Kim, a Boeing spokesman.
A difference of about 3 percent might sound insignificant, but for an airline, it can mean a difference of millions of dollars.
When the 777 was introduced in the mid-1990s, a difference of 0.5 percent was enough to prompt launch-customer United Airlines to send a letter in early 1996 to Boeing executives, warning them that the airplane’s reliability was “a major disappointment.”
Data released last year by Boeing shows that the 787’s early reliability was comparable or better than that of the 777, 767, 747-400 and 747-8.
Similarly, early Dreamliner operators grumbled about the airplane’s reliability.
Those complaints have quieted down in the past year as 787s have become more dependable.
Since 2011, Boeing has delivered more than 290 787s, including 37 787-9s. Dreamliners have flown more than 659 million revenue miles, carrying an estimated 55 million passengers
Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com; Twitter: @dcatchpole.
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