Is Boeing Falling Behind on 787 Dreamliner Deliveries?

Analysts at Sterne Agee report that deliveries of the company’s 787 may total just seven for the month of November, bringing the total for the year to 97, well below the 2014 guidance of around 110. If the analysts are right, there is no way that Boeing will build 13 Dreamliners in December to reach the projected total. At best the company could build 10, and that is unlikely to happen. Boeing’s own estimate of 110 for 2014 works out to just over nine planes a month

Sterne Agee also expects Boeing’s November deliveries to include 42 737s, three 747-8s, one 767 and nine 777s, in addition to the seven Dreamliners.

Boeing’s book-to-bill ratio as of November 25 was 1.6, with net orders for 2014 at 1,170 aircraft, including 878 737s and 263 777s. We have noted before the uncertainty Boeing faces in its transition from the current version of the 777 to the 777X, which is not due for first deliveries until late 2019. Here is what Sterne Agee has to say about the issue:

BA has listed 263 777 aircraft orders in 2014, which is based on 220 777X orders and 43 classic 777-300ER aircraft. BA needs 40-60 777-300ER aircraft orders a year to sustain the current 777 production rate intact before the 777X comes on line in late 2019. For the 2018-2020 period, BA needs to secure ~300 777-300ER orders to successfully bridge 777X entry into service (EIS) in late 2019 and 2020, respectively. We continue to model the 777 legacy annual deliveries over the 2015-2020 period as: 100, 84, 60, 60, 60, and 84, respectively.

The analysts also note that their delivery forecast for Boeing remains higher during that transition period due to higher deliveries of both the 737 and the 787.

Sterne Agee also expects Boeing to raise its dividend and increase its share buyback program this month at around the same time the company makes its capital allocation announcement for next year. The analysts “would not be surprised” if Boeing raised its dividend by 15% or more from its current rate of $0.73 per quarter. We predicted a rise to $0.80 to $0.85 per share.

Boeing’s shares traded fractionally lower early Wednesday, at $132.25 in a 52-week range of $116.32 to $144.57. Sterne Agee maintains a Buy rating on Boeing stock with a price target of $164.00.

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