Boeing predicts continued strong demand while now focusing primarily on cost saving

Boeing do not forecast a downturn in demand for civilian aircraft and do not believe, as some do, that the current high demand has peaked, despite concerns over the slowing growth in China. Greg Smith, Boeing’s Chief Financial Officer, has made the company’s current position very clear, saying that “We’re not seeing a slowdown in demand.” In addition, Smith stated that as airlines from a good number countries are buying significant numbers of planes to replace old ones, this was adding “more confidence in this cycle.”
The 787 Dreamliner is now the focus of attention for Boeing, particularly on the cost-cutting front. According to Smith “There’s no question getting 787 unit cost down, unit over unit, is a big if not the biggest focus area we have at the company.” The plane cost Boeing over US$30bn in production, tooling and one-time costs, while over the last quarter the company lost approximately US$23m for every delivered 787, despite a price tag of US$260m. As a consequence Boeing currently have over 1,100 elements of the 787’s construction process undergoing scrutiny to see where additional production costs can be reduced, having failed to meet their previous expected cost-cutting targets. One of the major problems is the cost of titanium, a vital component of the plane’s manufacture.
Pressure is now on Boeing to increase production levels from the current ten units per month it is currently operating at. Demand for the 787 variant is being adversely affected by the unattractive lengthy waiting time, so faster production would help. “If we had the opportunity to bring rate up faster, we would,” Smith said. He also predicted that cash flow would continue to rise as the company reduced its losses on the 787, though he would not be drawn on a new forecast. Boeing has indicated that it expects to have an operating cash flow in excess of US$9bn for 2015.