Following the Money: Where a Manufacturer's Margin Goes

When Boeing launched the 787 in 2004 it promised airlines a mid-size widebody built largely of carbon-fibre composites rather than aluminium, able to fly long, thin routes point to point, and it promised its shareholders a new aircraft without the capital load of earlier programmes. Return on net assets was a headline measure in the company's Chicago headquarters. Boeing would design the aircraft and integrate it; risk-sharing partners would design, build and largely fund complete sections. Mitsubishi Heavy Industries would make the wing, Kawasaki and Fuji other fuselage and wing-box sections, Spirit AeroSystems the forward fuselage, and Alenia and Vought, in a joint venture in South Carolina, the aft and centre fuselage (reported). The sections were to arrive in Everett, Washington, with wiring and systems already installed, so that final assembly would take a few days.

The supply chain was not ready. Sections arrived late and incomplete, with missing fasteners and paperwork, and Boeing had to finish them on its own line, which the industry calls travelled work. First flight slipped to December 2009 and first delivery to September 2011, more than three years late (reported). Boeing bought Vought's South Carolina fuselage operation in 2009 and later its partner's share of the joint venture, the start of what became Boeing South Carolina, where all 787 final assembly was consolidated in 2021 (reported). Batteries caught fire and grounded the fleet in 2013; flaws in how fuselage sections were joined halted most deliveries for much of 2020–22 (reported). Through all of it the aircraft sold. Airlines wanted the 787, and it became one of the fastest-selling widebodies in Boeing's history by orders (reported).

What the delays did to the accounts is the subject of this chapter. Under the program accounting method that US accounting rules allow aircraft makers, Boeing estimates the total revenue and cost of a block of aircraft it expects to deliver, its "accounting quantity", and books the same margin on each one. Early aircraft, which cost far more than the average because the factory and its suppliers are still learning, leave the excess cost on the balance sheet as an asset called deferred production costs; later aircraft, which cost less than the average, draw it down. The 787's deferred balance built up through the 2010s into the tens of billions of dollars (reported). At 31 December 2025, fourteen years after the first delivery, Boeing still carried about $13.86 billion of 787 deferred production costs and about $1.37 billion of unamortised tooling and other non-recurring costs. The balance had risen during 2025, from about $13.18 billion a year earlier, because 787s were still being delivered at a cost above the programme average. Boeing expected to recover about $13.0 billion of the balances from aircraft that already had firm orders and about $2.2 billion from aircraft representing orders it expected but did not yet have (10-K). The 787 line was building eight aircraft a month in the third quarter of 2026, with the next rate increase planned from December 2026.