Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
BW: Is Boeing Bailing Out Of Passenger Jets?  
User currently offlineKtliem@yvr From Canada, joined Aug 2001, 161 posts, RR: 0
Posted (11 years 3 months 2 weeks 5 days 16 hours ago) and read 3563 times:

From Business Week March 10, 2003:

"A new study says the giant plane maker's actions point to an exit strategy for the low-margin commerical-aircraft business.... The study (by Alan MacPherson and co-author David Pritchard) argues that Boeing will transform itself from a manufacturing operation into a global services corporation. MacPherson and Pritchard base their case on a trend that will be hard to reverse: the shifting of commercial-airplane manufacturing to low-wage outposts overseas, caused partly by the rise of European competitor Airbus Industrie."

The study is published in the March issue of the journal Futures.

For the rest of the article go to http://www.businessweek.com:/print/bwdaily/dnflash/apr2003/nf20030410_9298_db035.htm?pi (Subscribers
only)


7 replies: All unread, jump to last
 
User currently offlineConcordeBoy From , joined Dec 1969, posts, RR:
Reply 1, posted (11 years 3 months 2 weeks 5 days 16 hours ago) and read 3516 times:

is it me... or does that article remind you guys of what covers the grounds of a cattle pasture as well?  Laugh out loud

User currently offlineAC320 From , joined Dec 1969, posts, RR:
Reply 2, posted (11 years 3 months 2 weeks 5 days 16 hours ago) and read 3500 times:

Not really, it presents some interesting things to think about rather than dismiss it as BS outright.

User currently offlineCfalk From , joined Dec 1969, posts, RR:
Reply 3, posted (11 years 3 months 2 weeks 5 days 16 hours ago) and read 3484 times:

Financially, from the shareholders' point of view, it could make sense.

It would be a potential killer for many airlines, however. Giving Airbus a monopoly on 100+ seaters will inevitably lead to price gouging.

Charles


User currently offlineIkarus From United Kingdom, joined Jan 2001, 3524 posts, RR: 2
Reply 4, posted (11 years 3 months 2 weeks 5 days 15 hours ago) and read 3438 times:

Boeing quickly dismissed the study as "wrong" and declared it has no intention of giving up on a business that accounts for nearly 60% of its total revenue. "This report is riddled with factual inaccuracies and mistaken conclusions," Boeing spokesman Todd Becher told BusinessWeek Online. "We intend to continue our leadership in commercial airplanes for the long term."


Hmmmh.

I'll take Boeing's word ahead of that of some PhD student "analysts"...


Besides, doesn't the article (among other things) argue that Boeing may simply outsource more and more of the manufacturing? That could of course happen. Why not produce airplanes dirt cheap where wage costs are lower, and work motivation higher?

But all in all the article looks more like an Airbus-biased aviation enthusiast's homework than serious analysis & writing. Predicting the 7E7 will not be launched, accusing Boeing of not having developped any new planes in ages (777 accused of being based on "early 90s technology" - hmmm. What's the A320, A330, A340 based on?), happily pointing at order backlogs, etc. - pretty much like the average Airbus-Fan's postings in airliners.net, not much more analysis gone into it than that...

2013 we'll look at the article again and see whether the prediction of Boeing changing so dramatically "within 10 years" has come true...


User currently offlineCloudy From , joined Dec 1969, posts, RR:
Reply 5, posted (11 years 3 months 2 weeks 5 days 14 hours ago) and read 3405 times:

Financially, from the shareholders' point of view, it could make sense.

It would be a potential killer for many airlines, however. Giving Airbus a monopoly on 100+ seaters will inevitably lead to price gouging.

Charles

------


If that happened, there would almost certainly be a serious 3rd entrant into the business before Boeing goes out completely. An Asian consortium, perhaps.

IMHO the reason Airbus has developed airplanes at a faster rate than Boeing is because they have needed to create a whole product line from scratch. Now that Boeing and Airbus have more or less equal product lines, they are developing new products at about the same rate. Both will produce one new airframe this decade - the 7E7 and the A380. Both the 777 and A340 are seeing major upgrades. Perhaps the RJ makers will enter the 100-200 seat narrowbody market and force them to replace the 737 and A320 as well.

In the late 90's when defense was hurting and civil business was booming, things like this were not said as often. Even financial writers and engineers can have trouble thinking past the current business cycle, it seems.


User currently offlineCfalk From , joined Dec 1969, posts, RR:
Reply 6, posted (11 years 3 months 2 weeks 5 days 12 hours ago) and read 3305 times:

If that happened, there would almost certainly be a serious 3rd entrant into the business before Boeing goes out completely. An Asian consortium, perhaps.

Most certainly. Any time you have no competition, high margins, and no legal monopoly, someone will step in. The only barrier to market entry would be the high cost of entry (a new design in that range would cost $10+ billion), but like you said, a consortium could do that.

IMHO the reason Airbus has developed airplanes at a faster rate than Boeing is because they have needed to create a whole product line from scratch.

True. Virtually the whole current Airbus product line dates back less than 15 years. And since each was designed with the other ones in mind, they are very complimentary without excessive overlapping of capabilities. Boeing's product line is not very rational. To improve the situation, the B7E7 would have to replace both the 757 and 767 lines, and cover the range between 200 and 300 passengers in order to match that. The 717, sadly, also has a difficult position, as it competes with the 737-600.

Even financial writers and engineers can have trouble thinking past the current business cycle, it seems

Hell, they can't even see past the next quarter.

Charles


User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6578 posts, RR: 24
Reply 7, posted (11 years 3 months 2 weeks 5 days 11 hours ago) and read 3280 times:

I don't think Boeing will completely abandon the commercial business. However, I have argued for quite a while that Boeing will likely become more of a niche player with a smaller portfolio of clients. While Commercial accounts do make up 60% of Boeing's revenue's, the real profit margins come from the defense side. And since I don't see world peace breaking out anytime soon and we are likely to have a Republican administration through 2008, the defense business will serve Boeing well.

Even when the Commercial business comes back, the profit margins just aren't there anymore....especially since the largest potential growth market in the next five years are planes with 70-100 seats. This is an area where Boeing is weak to nonexistent.



Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
Boeing 744LCF Out Of The Hangar -- Photos posted Wed Aug 16 2006 07:22:02 by Brenintw
What Is Keeping LCCs Out Of CVG? posted Sat Jul 8 2006 02:36:03 by 1337Delta764
Boeing Running Out Of Sevens posted Mon Mar 20 2006 21:23:13 by Rolfen
Virgin (Whatever) Air, Is It Getting Out Of Hand? posted Fri Aug 12 2005 03:45:15 by Sabena332
Is A310 In/Out Of Production? posted Wed Jun 8 2005 22:39:30 by VSLover
Is B6 Pulling Out Of Dominican Republic? posted Thu Jan 27 2005 01:05:54 by Airfrancejfk
Boeing Buy-out Of GE Engines? posted Tue Aug 3 2004 20:20:42 by ConcordeBoy
Is US Airways Out Of Trouble Yet? posted Wed Oct 15 2003 03:35:25 by Nickofatlanta
How Many 737's Is Boeing Kicking Out? posted Sun Oct 13 2002 04:15:00 by Stlbham
"Beware Of Bombs In Cargo Of Passenger Jets" posted Tue Jun 11 2002 11:06:45 by Toda,Reisinger
Is Boeing Stalling Announcement Of 787 Delay? posted Tue Dec 21 2010 18:14:29 by tullamarine
Is XJ Pulling Out Of FOD (Fort Dodge, Iowa)? posted Thu Jun 4 2009 19:19:45 by Evanbu
Is JetBlue Squirming Out Of Their Bill Of Rights? posted Fri Oct 10 2008 00:42:19 by Luv2cattlecall
Is DL Pulling Out Of LGW? posted Wed Jul 16 2008 18:44:48 by Swissair4ever
Is BA Cityflyer Out Of LCY But On Board Or Not? posted Thu Apr 12 2007 12:32:05 by Ba757gla
Is Flying In/out Of THF Worth It? posted Thu Jan 11 2007 19:52:44 by FlyTPA
When Will The 747 Be Out Of Passenger Service? posted Sat Dec 2 2006 02:17:47 by Scalebuilder
Boeing 744LCF Out Of The Hangar -- Photos posted Wed Aug 16 2006 07:22:02 by Brenintw
What Is Keeping LCCs Out Of CVG? posted Sat Jul 8 2006 02:36:03 by 1337Delta764
Boeing Running Out Of Sevens posted Mon Mar 20 2006 21:23:13 by Rolfen