Boeing 747 Backlog Doubles -- Sort Of, and Not in a Good Way

Boeing's (BA -0.03%) iconic 747 is flying off into the sunset. It's time to wave goodbye.

Bye-bye, Boeing 747. You will be missed. Image source: Boeing.

Just over a year ago, in December 2014, I noted how a dearth of new orders heralded the death of the 747 program. Despite winning a handful of new orders in 2015, the math has not changed. Of 39 orders in backlog in December 2014, only 20 remain today.

That poses a problem: On one hand, Boeing customers obviously want to get their new planes as soon as possible. At the same time, Boeing needs to keep 747s in production through 2019. In particular, it needs two 747-8s available to replace the brace of Boeing 747-200s currently serving as Air Force One, when the Air Force asks to have them delivered. That switchover is slated to happen sometime between 2017, when the President's 747-200s reach the end of their service lives, and 2019.

Hedging its bets to meet these two conflicting goals, Boeing announced last month that it is cutting the rate at which it produces 747s. By slowing down production rates to just half-a-plane per month, Boeing will be able to stretch out the production schedule to encompass the Pentagon's desired delivery dates.

Presto chango
And abracadabra -- all of a sudden, Boeing has doubled the number of calendar months that the 747 will remain in production. It's not as desirable a solution as winning new orders to fill out the production schedule, granted. But it's a solution that will work in a pinch.

It also gives us a good excuse to update you on Boeing's current backlog picture, how many planes it's been contracted to produce, how fast it can build 'em, and how long the production backlogs look at the latest announced rates.

So here goes. Based on the most current data, the production schedule looks roughly like so:

*These are actually decelerations in production rates.
**Boeing has warned that a further deceleration in "original recipe" 777s may be necessary before it switches to production of the new 777X. On the other hand, Boeing has also noted plans to potentially build 777X airplanes as fast as 10.4 PPM.

Where we are now
Since we last checked in on Boeing's production rate and backlog numbers in September, we see that the company has added 123 single-aisle 737s to its backlog. However, the acceleration in production cut the time needed to work through that backlog by nearly five months.

Backlogged orders are down for both the 747 and 777 production lines -- but in terms of time, the backlogs have lengthened for both aircraft, thanks to a slowed pace of production.

Finally, in terms of time, backlogs have shortened for both the Boeing 767 and 787 -- by about three months each. In each case, this is largely because new orders aren't coming in quite fast enough to keep up with old orders being fulfilled.

Bull or bear?
What does all of this mean for people investing in Boeing? Should we be bulls or bears? I see two major stories here, in addition to the 747's newly extended lease on life:

Clearly, the company's 737 line of aircraft is the Boeing line that's doing the best -- and that's great news, because the 737 is one of Boeing's most profitable airplanes.

Conversely, shrinkage in the number of Boeing 777s in backlog -- and Boeing's 777 is perhaps even more profitable than the 737 -- is more problematic. The company has elongated its production schedule, true. But that just spreads the pool of potential profits a bit thinner over time. This could depress Boeing's profits somewhat in the medium term, while we await the 777X's arrival.

As problems go, this isn't enough to turn me bearish on the company as a whole. But it is worth "bearing" in mind.

Boeing's 737: For profits, it's more important now than ever before. Image source: Boeing.