Boeing 2010 Annual Report Download - page 39

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beginning in June 2010. In March 2010, we announced that we will accelerate by approximately six
months, from early 2012 to mid-2011, a planned production rate increase to 7 airplanes per month. In
December 2010, we announced that monthly production of the 777 will increase from 7 to 8.3 airplanes
per month in the first quarter 2013.
787 Program First flight of the 787 occurred on December 15, 2009 and flight testing for certification
continued during 2010. Flight testing involves six flight test aircraft and a limited amount of testing on
two production-configured airplanes prior to first delivery. On August 27, 2010, we announced that the
expected date of first delivery of the 787 had been moved to mid-first quarter 2011 from the fourth
quarter of 2010. This schedule revision followed an assessment of the cumulative impact of a number
of issues, including supplier workmanship issues related to the horizontal stabilizer, instrumentation
delays and the expected availability date of an engine needed to support the final phases of flight test.
On November 9, 2010, a flight test aircraft lost primary electrical power as a result of an onboard fire.
Back-up systems functioned as expected allowing the crew to complete a safe landing. Flight testing
was suspended pending investigation. On November 24, 2010, we announced minor design changes
to power distribution panels and updates to systems software resulting from the investigation. On
December 23, 2010, we resumed Boeing flight test activities and on January 17, 2011 resumed
certification testing. On January 18, 2011, we announced that the expected date of first delivery had
been moved to the third quarter of 2011 due to the flight testing and certification delays.
A number of engineering and other design changes have been identified in conjunction with the flight
test program that are being incorporated into our production system and on aircraft already completed.
During 2010, we continued to produce 787 airplanes and until completion of our flight test program,
there is risk that additional items will be identified that require further modifications or other changes to
those aircraft we have produced.
We continue to monitor and address challenges associated with assembly of initial airplanes including
management of our extended global supply chain, incorporation of design changes into aircraft in
various stages of assembly, completion and integration of traveled work as well as weight and systems
integration. For example, during the second quarter of 2010 we delayed some 787 component
deliveries to reduce out of sequence work moving into final assembly at our Everett factory and
improve supply chain efficiency.
We continue to work toward planned increases in 787 production rates as well as the timely
introduction of the 787-9 derivative. Such efforts include the construction of a second assembly line in
North Charleston, South Carolina and establishing transitional surge capacity at our Everett,
Washington location. On July 1, 2010, we completed firm configuration of the 787-9 airplane with first
delivery scheduled for late 2013.
We continue to work with our customers and suppliers to assess the specific impacts of schedule
changes, including delivery delays and supplier assertions. Efforts continue to ensure we remain
focused on satisfying customer mission and performance needs in light of the anticipated weight of
their respective aircraft. A number of our customers have contractual remedies for schedule delays
and/or performance. We continue to address customer and supplier claims and requests for other
contractual relief as brought forth.
During 2009, we concluded that the first three flight-test 787 aircraft could not be sold as previously
anticipated due to the inordinate amount of rework and unique and extensive modifications made to those
aircraft. As a result, costs associated with these aircraft were included in research and development
expense. We believe that the other three 787 flight test aircraft are commercially saleable and we continue
to include costs related to those aircraft in program inventory at December 31, 2010. If we determine that
one or more of the other flight test aircraft cannot be sold, we may incur additional charges.
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