Boeing’s 2011 accomplishments clear the air for new, more manageable challenges

A year ago, the Boeing Co. faced a number of challenges.

The 787 program had just suffered another setback. An electrical fire on a test plane grounded the company’s Dreamliner flight-test fleet.

The company was still weighing the future of the 737, even as rival Airbus launched a re-engined A320 with much success.

And Boeing looked to be on the losing end of a contest to supply the U.S. Air Force with aerial refueling tankers.

What a difference 2011 made.

Tanker

After being called the underdog for months, Boeing beat rival EADS for a $35 billion tanker contract with the Air Force in February. The Air Force’s decision put an end to the decade-long tanker saga, while ensuring Boeing’s 767 employees in Everett will have work for the next decade. An order late in the year from FedEx for 767s should tide the company over until it starts building the Air Force tankers.

787-8 delivery

After a delay of more than three years, Boeing handed over the first 787 to Japan’s All Nippon Airways in September. Boeing Commercial Airplanes President Jim Albaugh dubbed the delivery “the dawn of a new day in commercial aviation.” But analyst Richard Aboulafia of the Teal Group called it a “nice step,” saying that Boeing’s true test comes in ramping up 787 production. ANA put the Dreamliner into commercial service in November.

737 MAX

For months, Boeing executives belittled the idea of re-engining the company’s popular 737. But over the summer Boeing was forced into that plan when it stood to lose out on a major order from American Airlines if it didn’t offer an updated single-aisle jet to match Airbus’ A320 new engine option model.

Boeing drew criticism from airplane leasing guru Steven Udvar-Hazy, CEO of Air Lease Corp. and founder of International Lease Finance Corp., who in August called Boeing’s re-engined jet a “Band-aid” solution. Within days, however, Delta Air Lines committed to 100 of Boeing’s new 737 MAX jets. Southwest Airlines, Boeing’s biggest 737 customer, got behind the MAX in December, handing Boeing its biggest order ever.

The company has more than 900 orders and commitments for the 737 MAX.

Machinists

Boeing and the Machinists union looked to be at odds most of the year, after the National Labor Relations Board took the union’s side and filed a lawsuit against Boeing, saying it illegally retaliated against the union in 2009. The court case was expected to drag on for years, even as Boeing decided where to build the 737 MAX and was expected to negotiate a new contract with the union in 2012.

In late November, Boeing and Machinists officials stunned just about everyone when they announced a deal that extended the union’s contract until 2016, ensured the 737 MAX will be built in Renton and resolved the labor board dispute.

Orders

At year’s end, the jet maker is on track to have its best sales year since 2007, with 778 net orders through Dec. 20. Boeing bested its own order record twice in one week in November during the Dubai Air Show and then again in December. Still, the Chicago-based company likely will fall behind rival Airbus, which had 1,378 net orders through November.

2012

What’s ahead for Boeing in 2012?

747-8: Boeing didn’t manage to cross off that one last to-do in 2011 — deliver the first 747-8 passenger plane. Boeing said it will do so in early 2012. Through the end of November, Boeing had handed over six 747-8 freighters. The company plans to up the production pace of the 747 to two jets per month by mid-2012.

787 production: Airlines have been waiting three extra years for their 787s. Having handed over the first Dreamliner to ANA in September, Boeing has an aggressive plan for boosting production.

At the end of 2012, the company intends to produce five Dreamliners per month on the way to a goal of 10 787s each month in late 2013. The quicker Boeing can meet that goal, the more profitable the company will be.

But building 10 787s monthly means Boeing and a global supply chain have to be in sync. In November, Jim Albaugh, president of commercial airplanes, said the company is closely monitoring 787 suppliers.

“We are drilling down into every work cell to make sure they’re ready,” he said.

SPEEA contract: Although Boeing struck a deal with the Machinists union ahead of schedule, the company’s contract with the union that represents engineers and technical workers expires next fall. Leaders for the Society of Professional Engineering Employees in Aerospace say they’re not yet negotiating a new contract. But they’re open to talking to Boeing about it early.

“Our focus is on getting a good contract,” Ray Goforth, executive director of SPEEA, said earlier this month. “If we could get one quickly, that would be good for everyone.”

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