Ouboy79 From United States of America, joined Nov 2001, 4481 posts, RR: 22
Reply 4, posted (10 years 12 months 3 days ago) and read 2608 times:
The struggling 767 line is also getting important assistance from Boeing Capital. Employment on the line is on its way down to 400 workers from 1,400 a year ago as production falls to just one plane every six weeks, versus three-and-a-half per month before Sept. 11, 2001.
Again, the picture would look even worse without Boeing Capital. The finance unit has pledged $575 million to help American Airlines take delivery of nine 767s this year — or nearly half of all the planes due to come off the line in Everett.
I guess they should shut down the 767 line as well, eh 777236ER?
Any opinion/comment posted is that of my own and not that of Southwest Airlines Co.
LMP737 From , joined Dec 1969, posts, RR:
Reply 10, posted (10 years 12 months 2 days 19 hours ago) and read 2253 times:
Boeing was planning to build 737's in Long Beach in the late 90's. The idea was to build 737QC and military derivatives on the unused portion of the MD-11 line. Boeing put in some jigs and built a huge gantry to support production. Then Boeing changed it's mind and ended cutting up $36 million dollars worth of tooling.
Cloudy From , joined Dec 1969, posts, RR:
Reply 13, posted (10 years 12 months 1 day 15 hours ago) and read 1972 times:
Yes they should. Roll on the 7E7.
Don't roll your eyes at me. The 717 has not, and will not, make money for Boeing
Yes. The 7E7, in addition to opening new markets, will also serve as a more-or-less direct replacement for the 767. It is hard to imagine that this program will sell a significant number planes to non-government operators after the 7E7 is available. Even in good times, there is a reluctance to order a plane when its replacement is already in development.
Boeing is in a race with time to come up with attractive yet doable performance guarantees for the 7E7 so it can launch the program. Once the program is launched, they will be under tremendous pressure to stick to the schedule. Once you kill the market for an old bird by announcing a new one, you have to get the new one out as fast as you can or you will lose a lot of orders in the transition. This makes the process of replacing an old plane with a new one pretty tricky from a marketing standpoint.
As for the 717 not ever making money - this could be true yet it might still make sense to continue the program. There are two ways this could happen -
1. It could be profitable to sell each plane but even so the plane would not ever make back its development cost. Since the development cost has already been paid, in this case it makes sense to keep the program because money is still being made and it would cost to much to redirect the capital invested to more profitable activities.
2. Boeing could be losing money with each plane built and it might still make sense to continue the program. Why? because, as others mentioned, it costs money to close a production line. Contractual penalties must be paid. Equipment must be moved, and hazerdous waste disposed of. Union workers have to be layed off, and this causes both financial and labor relations problems. These costs could easily add up to more than what you are losing by continuing to make the plane.