It’s been a challenging year overall. Not just for Boeing (BA), not just for jet makers, not just for airlines… but for everyone, and one thing we have in common with the industry is that we all have been looking for positive developments. Those positives have been easing lockdowns, increasing test capacity and vaccine developments and availability.

Many of those positives we’d appreciate to normalize our day-to-day life are also catalysts for the travel industry. Improving test capacity and easing lockdowns offer better prospects for rebuilding the airline network, while a vaccine development is the long-term solution supporting a full recovery of the industry. Those elements also add positively to the equation for Boeing, which faces a double crisis as it suffers a blow to demand for new aircraft due as well as the ongoing Boeing 737 MAX crisis.FAA Boeing 737 MAX recertification

Source: The Seattle Times

For Boeing, the added positive is the prospect of the Boeing 737 MAX recertification. In a piece that I wrote before COVID-19 became an immediate pressure to the world, I noted that the (prospect of) recertification could provide a pop in Boeing share price – and that did happen, as the price has been lifted by nearly 15% in 2 trading days.

Over the past few weeks, I’ve been asked what the MAX schedule looks like. In July 2020, I looked at the schedule after it was reported that recertification could slip to 2021, and while since October 2019 I had been bearish on the timeline for the Boeing 737 MAX schedule, I became somewhat more upbeat on the timeline of the MAX schedule, as I noted that a lot of sequential activities would stretch the timeline, and from that point on, it would only be a matter of days for the schedule to slip into 2021.

As we are nearing Boeing’s (NYSE:BA) Q3 result earnings call in October, we are also expecting Boeing to announce or outline consolidation plans for the Boeing 787. The announcement seems to be a formality as Boeing faces lower costs in North Charleston for the Dreamliner production, and demand for wide body aircraft has dwindled, and the company has been looking for ways to make its business less prone to work disruptions from the strong unions in the Seattle area.

In this analysis, we will look at why this is a major blow to the Everett assembly site.

Boeing moves Boeing 787 production Everett Washington to North Charleston South Carolina

Source: Australian Aviation

Note from Author: As we were preparing this report for subscribers, The Wall Street Journal reported that Boeing will set plans this week to consolidate production in South Carolina.

Wide body in Washington state to tumble

Moving the Boeing 787 from Washington would be a blow for the Everett facility. In 2019, the delivery volume for Everett was 172 wide body aircraft, providing significant cash inflow at a time that the Boeing was under significant pressure due to the grounding of the Boeing 737 MAX, and that pressure remains to this day. How big of a blow this would be to the Washington state becomes clear when we look at how many of those aircraft were Dreamliners, and that are 78 aircraft or 45% of the total.

Table 1: Aircraft production in Everett (Source: AeroAnalysis)

So, if we look over a 5-year period from 2019, then we know that at least 78 deliveries or 45% of the 2019 volume will be gone. Additionally, the Boeing 747 program will be terminated by 2023, taking another 6 aircraft away from the Everett output. The biggest wide body that Boeing currently produces is the Boeing 777, and the production on that program is