Jetrader - January/February 2010 - 10

A320 is a very efficient airplane, as well. When we look at that market, in order to do those things, we need not just new engines; we need new developments in systems, aerodynamics, materials… Those technologies aren’t available today, and they probably won’t be available until sometime late in the next decade. That’s the timeframe that we’re looking at for a replacement, but we have a great product in the meantime that continues to sell and we continue to improve. J: So the re-engineering is still on the table? RT: Like I said at the ISTAT European Conference, we’re looking at all things at all times. Our team is there to look at ways that we can innovate and improve the existing product, and re-engineering the airplane is definitely one of those things that we look at. J: The recently announced delays in the B787 and B747-8 first flights beg the question of program delays at Boeing. Do airlines just have to get used to program delays with new airplane programs because of all the cutting-edge technology that is being applied to meet guaranteed performance or do you see a deeper, more fundamental root cause for these repeating problems, and how do you recommend addressing them? RT: First of all, we clearly have disappointed our customers with our supplier issues and our manufacturing issues around the 787. We completely understand that, and being late with a program at Boeing is definitely an aberration; it’s not business as usual. The last airplane we had late to the market was the 747-400, which was two months late. It’s an aberration, but it’s an issue about the complexity of the aircraft. Clearly, whether it be Boeing or Airbus or Embraer or Bombardier, it takes an immense amount of capital to bring a new airplane to the market; it takes new technologies; it takes intellectual capital, and you have to do that on a global basis. We’ve had to change our design and manufacturing systems to reflect where the capital is, where the technology is, where the intellectual capital is; we changed our production system to accommodate that and clearly made mistakes. But, we’re making adjustments to how we’re designing and building the 787-9, for example, and we’re bringing some more things in house. This has been a difficult program to get through; we will learn from it, and we will improve the process as we go into the next airplane. J: The biggest surprise seemed to be the delay on the -8, because it’s a derivative. RT: I was on the program for the 747-8, and the resources we needed for the design of that airplane weren’t being released from the 787, which meant that the airplane design got done late because there was more rework in the factory and more disruption. That’s why you’ve seen more delay in that program. J: Our friends in China have a very ambitious program called the C919 that they are developing and producing for their domestic and regional markets. How will that affect the outlook on the Boeing products, or any Western-built products, with specific consideration for the narrowbodies? RT: I think that we’re in a very unique situation where there are only two competitors in the marketplace. Over the years, we’ve had many more competitors in different segments of the market, so this isn’t a surprise to us, especially when you look at the single-aisle market, there are about 19,000 airplanes over the 20 years; clearly, that’s a big market. Manufacturers from China, Russia, Japan, Brazil, Canada, they’re all going to look into that market, especially as the regional-jet market continues to decline in terms of size. There’s no surprise there, but to be successful, it’s not about watching the competition. Sure, when new competition comes in, they bring new technology and new ideas, but that makes us all better. For us to be successful, we have to be close to our customers, because one of the strengths we have is this big customer base, as well as an incredibly diverse support staff and support structure that new manufacturers don’t have. We have to continue to invest in technology; we have to make sure we have the right plan and the right strategy, and we have to continue to focus on reducing the cost of producing airplanes. If we do all of those things, we’ll be successful no matter what the competition does. J: Are there any considerations at Boeing for a future B737 final assembly line in China like Airbus did with the A320? RT: We’ve built airplanes in China before, and even Airbus will tell you that the airplanes they’re building in China are more expensive than the airplanes they’re building in Toulouse. Frankly, we’ve chosen to invest in China in a different way. We have a number of joint ventures—everything from composite manufacturers to airplane modifications and airplane maintenance. In our business, we have 6,000 people employed by those ventures—by far, more than any other manufacturer. We’ve been in China now for more than 35 years, and we have helped develop the supply base. And just like no one supports the aviation industry in terms of jobs like Boeing, no one buys more parts and assemblies from the Chinese suppliers than we do. We have a strategy for China; it’s just different; it’s about developing new suppliers so we have well-funded, capable suppliers, and it’s about market access, as well. J: The B737-300 is one of the aircraft whose values have been most affected by the current downturn. This while the aircraft is still one of the most-used aircraft with airlines worldwide. Will the values recover, or will they further drop from this current low end as they get older? RT: Working on aircraft values isn’t part of my purview, but clearly the classic 737, as well as the MD80, has been hit really hard by the downturn, including some of the older A320s for two reasons: number one is the high prices of fuel, and number two is 10 The official publication of the International Society of Transport Aircraft Trading

Jetrader - January/February 2010

Table of Contents for the Digital Edition of Jetrader - January/February 2010

Jetrader - January/February 2010
A Message from the President
Q&A: Randy Tinseth
Thinking Global
Dateline: Dubrovnik
Aircraft Appraisals
Aviation History
From the ISTAT Foundation
Advertiser Index
Jetrader - January/February 2010 - Jetrader - January/February 2010
Jetrader - January/February 2010 - Cover2
Jetrader - January/February 2010 - A Message from the President
Jetrader - January/February 2010 - 4
Jetrader - January/February 2010 - Contents
Jetrader - January/February 2010 - 6
Jetrader - January/February 2010 - Calendar/News
Jetrader - January/February 2010 - Q&A: Randy Tinseth
Jetrader - January/February 2010 - 9
Jetrader - January/February 2010 - 10
Jetrader - January/February 2010 - 11
Jetrader - January/February 2010 - Thinking Global
Jetrader - January/February 2010 - 13
Jetrader - January/February 2010 - 14
Jetrader - January/February 2010 - Dateline: Dubrovnik
Jetrader - January/February 2010 - 16
Jetrader - January/February 2010 - 17
Jetrader - January/February 2010 - Aircraft Appraisals
Jetrader - January/February 2010 - 19
Jetrader - January/February 2010 - 20
Jetrader - January/February 2010 - Aviation History
Jetrader - January/February 2010 - 22
Jetrader - January/February 2010 - Advertiser Index
Jetrader - January/February 2010 - Cover4