Boeing 2008 Annual Report Download - page 43

The accounting quantity for the 747 program increased by 25 units in 2008.
767 Program The accounting quantity for the 767 program increased by 25 units during 2008. On
February 29, 2008, the U.S. Air Force announced it had chosen a competitor’s bid over our proposed 767
derivative to build 179 replacement tankers for the Air Force’s aging KC-135 fleet of air-to-air refueling
tankers. On March 11, 2008, we filed a formal protest with the Government Accountability Office, citing
irregularities with the process of the tanker competition and the evaluation of the competitors’ bids. On
June 18, 2008, the Government Accountability Office sustained our protest of the contract award. On
September 10, 2008, the Department of Defense notified the Congress and the two competing
contractors, Boeing and Northrop Grumman, that it was terminating the current competition for a U.S. Air
Force airborne tanker replacement. We anticipate that the tanker competition will re-open in 2009.
777 Program The accounting quantity for the 777 program increased by 100 units during 2008.
Delivery of the first 777 Freighter is scheduled for early 2009.
787 Program We are in the final stages of assembly of the initial airplanes and planning for flight test.
The risks that are always inherent in the latter stages of new airplane program production remain. We
continue to address challenges associated with assembly of the first few airplanes, including
management of our extended global supply chain, completion and integration of traveled work, weight
and systems integration. We are also continuing efforts to satisfy customer mission and performance
needs in light of the anticipated weight of their respective aircraft. During 2008, we announced schedule
delays for the 787 airplane. First flight of the 787-8 airplane has moved from the second quarter of 2008
into the second quarter of 2009. Delivery of the first 787 moved from early 2009 into the first quarter of
2010. Delivery schedules for 787 derivative airplanes may also be impacted. The revised schedule
reflects the cumulative impacts of disruption caused by the recent IAM strike, the requirement to replace
certain fasteners in early production airplanes, as well as the impact from the challenges mentioned
above. We continue to work with our customers and suppliers to assess the specific impacts of schedule
changes, including delivery delays and supplier assertions associated with such changes. A number of
our customers have contractual remedies that may be implicated by our revised plan for the 787. We
continue to address customer claims and requests for other contractual relief as they arise.
Fleet Support We provide the operators of our commercial airplanes with assistance and services to
facilitate efficient and safe aircraft operation. Collectively known as fleet support services, these
activities and services begin prior to aircraft delivery and continue throughout the operational life of the
aircraft. They include flight and maintenance training, field service support costs, engineering services
and technical data and documents. The costs for fleet support are expensed as incurred and have
been historically less than 1.5% of total consolidated costs of products and services. This level of
expenditures is anticipated to continue in the upcoming years. These costs do not vary significantly
with current production rates.
Research and Development The following chart summarizes the time horizon between go-ahead and
certification/initial delivery for major Commercial Airplanes derivatives and programs.
Go-ahe ad and Certification/Delivery
787-8
787-9
777-200LR*
777-F
747-8 Freighter
747-8 Intercontinental
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
* Go-ahead prior to 2003
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