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Planning Activity

Case study 1: Boeing Boeing. Case study 2: Capacity Utilisation 2012. Evaluation Is low capacity always a problem? (slide 15).

1

Revised

October

14, 2008

Boeing

787:
The

Dreamliner

(B) In April 2008,

Boeing

confirmed a delay in the

787-airplane

and announced a

14-month

delay in delivering

Boeing's

most anticipated airplane. The

Boeing

787-airplane,

to be put in servic e in 2008
initially, has become

Boeing's

best-selling new plane ever; as of

September

2008,
the

Boeing

co mpany had orders for 895
airp lanes from 58
custom ers worldwide with an estimated backlog value of $151 billion (see

Exhibit

1 for the different

787-airplane

configurations that

Boeing

offers).

Although

not a full-blown crisis such as the one faced by

Airbus

with its

A380-airplane

delays, the announcement was nonetheless a potentially serious setback for

Boeing.

Notes the Wall

Street

Journal:

"Some analysts believe

Boeing

could be liable for as much as $4 billion of concessions and penalty payments to airlines for missed deadlines.

Boeing

plans to book the first 25
deliveries at zero-profit margin to cove r penalties."1

An alyst

estimates indicate that the delay could cost

Boeing

over $2 billion dollars in penalties alone, plus additional R&D expenses over the next few years (see

Exhibit

2).

According

to

Boeing's

revised schedule, the first test flight of the

787-airplane

was expected to be carried out in late 2008,
and the first deliveries in the 3rd quarter of 2009.
The company also planned a dramatically slower ramp-up in production;

Boeing's

goal now is to produce 10 787s
a month startin g in 2012,
a fi gure s ignificantly lower t han originally planned (see

Exhibit

3). Notes

Bo eing's

787
spokesperson,

Y vonne

Leac h,

the average delay for all 58

787-customers

is expected to be about 20 months.2

Reasons

and

Response

to the

Delays

Reasons

for the Delay

Boeing

attributed its first delay, announced in

October

2007,
to an unexpected shortage of fasteners the "nuts and bolts" that hold an airplane together. The job of getting fasteners became more complicated and resulted in further delays because the suppliers who rushed to make them did not properly document their work as required by federal authorities.

Professors

Suresh

Kotha,

Olesen/Battelle

Chaired

Professor,

University

of

Washington,

Foster

School

of

Business,

and

Richard

Nolan,

William

Hardi ng

Professor

of

Business

Administration

(Emerit us),quotesdbs_dbs14.pdfusesText_20
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