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How Boeing Can Sell The 787 So Cheap  
User currently offlineBoomBoom From , joined Dec 1969, posts, RR:
Posted (8 years 8 months 2 weeks 4 days 22 hours ago) and read 5202 times:

A good article in MarketWatch explains why the 787 breaks with Boeing's past:
http://www.marketwatch.com/news/stor...A7F-BC6D-40AD0EB90557}&siteid=mktw

"Boeing was less aggressive on new materials in aircraft than Airbus, and now Boeing is more aggressive,"

Another advantage of composites: Boeing expects to get more for its money.

For every five to six pounds of aluminum it buys, only one pound of that may end up being built into the plane's body, according to Bair.

"Composites are just the opposite," he said. "You probably get 90% of the material flying away because it's an additive process."

John Greenlee, Continental Airlines' director of fleet planning, said that the 787's fuel efficiency is a "huge attraction" but it's more than that.

"They've tried to make a true comprehensive design from the start," he said. That includes looking at how configuring planes helps or hurts their residual values and how much maintenance will be needed by using composite materials.

Greenlee adds that the plane's simplified choice of interiors and ability to quickly swap engines make it easier to sell it to another airline, giving it a higher value in the end.

Boeing is also borrowing another page from the Airbus playbook by giving more work to contractors.

In the wake of a machinists strike that halted production on Boeing's commercial aircraft line this year, some analysts say the 787 is going to change labor-management relations at the company.

"This was a huge issue when they were making those outsourcing decisions," said Richard Aboulafia, vice president of analysis at Teal Group, an aerospace consulting firm based in Fairfax, Va.

The arrival of the Dreamliner means that Boeing's commercial airplane suppliers, which now number about 1,200, are going through big changes in how they work with the aerospace giant not just today, but in the future.

It can use fewer workers on the production line and tie up less capital during the plane's development when its suppliers take on bigger roles with engineering and manufacturing.

Clay Jones, chief executive officer of Rockwell Collin said research and development spending on the 787 is about the same as its work on the 777, 747-400, 757 and 767. Staying on budget, however, is far easier because Rockwell Collins has more control over the production plan, both saving time and money.

The company has bundled together fly-by-wire flight control systems, surveillance and communications systems and displays on the flight deck, effectively taking on more work than it otherwise would.

Boeing's defense-contracts division is positioning itself so that it can supervise ever bigger contracts where it has more authority over subcontractors while carrying out less of the actual work itself.

A similar trend is at work with the 787, Aboulafia said.

"Manufacturing is not a big part of the profit model. Maintenance, finance, support ... the service aspect is."


29 replies: All unread, showing first 25:
 
User currently offlineKeesje From , joined Dec 1969, posts, RR:
Reply 1, posted (8 years 8 months 2 weeks 2 days 21 hours ago) and read 4920 times:

Quoting BoomBoom (Thread starter):
A similar trend is at work with the 787, Aboulafia said.

"Manufacturing is not a big part of the profit model. Maintenance, finance, support ... the service aspect is."

Especially financing. Just saw a press release The US government is financing some EK 777-300ER´s via its Export-Import Bank, that "supports the financing of U.S. goods and services, maintaining, and creating more U.S. jobs..."

Air Canada ok, but Emirate$..

http://today.reuters.com/investing/f..._0_AIRLINES-EMIRATES-FINANCING.XML


User currently offlineFlyingHippo From United States of America, joined Aug 2005, 684 posts, RR: 1
Reply 2, posted (8 years 8 months 2 weeks 2 days 21 hours ago) and read 4894 times:

Quoting Keesje (Reply 1):
Especially financing. Just saw a press release The US government is financing some EK 777-300ER´s via its Export-Import Bank, that "supports the financing of U.S. goods and services, maintaining, and creating more U.S. jobs..."

Air Canada ok, but Emirate$..

Eh... How does EK financing with a US bank or government helps to cut down the cost of 787?? EK is borrowing money to pay Boeing, but it doesn't help Boeing to reduce it's manufacturing costs...

Or, as always, you like to imply otherwise with some of your posts but just say what you're really trying to say?


User currently offlineZvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 64
Reply 3, posted (8 years 8 months 2 weeks 2 days 21 hours ago) and read 4883 times:

The reason why the B787 costs less to manufacture is that the production method is more automated and requires much less labor.

User currently offlineAJRfromSYR From United States of America, joined May 2005, 454 posts, RR: 0
Reply 4, posted (8 years 8 months 2 weeks 2 days 21 hours ago) and read 4856 times:

How does financing through anyone but Boeing help Boeing?


-AJR-
User currently offlineN1786b From United States of America, joined Sep 2005, 559 posts, RR: 17
Reply 5, posted (8 years 8 months 2 weeks 2 days 20 hours ago) and read 4782 times:

You seriously can't believe that Airbus doesn't use the same thing, now can you?

I was expecting you to complain about all those hidden Boeing subsidies....

http://www.exim.gov/about/reports/compet/competpart201.pdf

Just what do Export Credit Guarantee Department (ECGD), France’s COFACE, Spain’s CESCE, and Germany’s Hermes do all day long?

And it looks like your pal Noel isn't happy when the European taxpayers don't subsidize Airbus sales:

THE Airbus chief executive Noel Forgeard has accused Britain’s Export Credit Guarantee Department (ECGD) of “totally losing sight of its duties” by failing to support commercial aircraft sales.

http://business.timesonline.co.uk/article/0,,9067-1184324,00.html

And why is the Director of COFACE a EADS Board member?

http://www.eads.net/web/lang/en/1024...F00000000400004/6/03/31000036.html

And Q3 2005, Airbus was able to get $436million of credits from COFACE FRANCE for the delivery of 26 planes:

1 A340-600, 3 A330-300, 4 A330-200, 1 A321-231, 1 A321-200, 11 A320-200,
1 A319-111, 3 A319-100,1. A319-CJ
To the following:

Thaï Airways, China Southern, China Airlines,
China Eastern, Eva Airways, Austrian, Bouillioun, Asiana, Debis, KLM, Azal, Cebu Air
http://www.coface.fr/dmt/_docs/gc3-05.pdf

Go ahead and check every Quarter here on this site - Airbus is there - it even has its own section at the end of each document. And you have to wonder why the French are financing AB NBs Made in Germany.

http://www.coface.fr/dmt/rubg_act/indexg.htm

- n1786b


User currently offlineBigB From United States of America, joined Nov 2003, 596 posts, RR: 2
Reply 6, posted (8 years 8 months 2 weeks 2 days 20 hours ago) and read 4772 times:

Quoting Keesje (Reply 1):
Especially financing. Just saw a press release The US government is financing some EK 777-300ER´s via its Export-Import Bank, that "supports the financing of U.S. goods and services, maintaining, and creating more U.S. jobs..."

Air Canada ok, but Emirate$..

http://today.reuters.com/investing/f...G.XML

Your point is .....



ETSN Baber, USN
User currently offlineAPFPilot1985 From , joined Dec 1969, posts, RR:
Reply 7, posted (8 years 8 months 2 weeks 2 days 20 hours ago) and read 4736 times:

I work with Aluminum fabrication and machining and I can attest that it sucks to work with and its very wasteful

User currently offlinePHXinterrupted From United States of America, joined Apr 2002, 474 posts, RR: 0
Reply 8, posted (8 years 8 months 2 weeks 2 days 20 hours ago) and read 4671 times:

Quoting Keesje (Reply 1):
Especially financing. Just saw a press release The US government is financing some EK 777-300ER´s via its Export-Import Bank, that "supports the financing of U.S. goods and services, maintaining, and creating more U.S. jobs..."

Air Canada ok, but Emirate$..

http://today.reuters.com/investing/f...G.XML

It's only $265 million. BTW, Europe does the same thing for Airbus.



Keepin' it real.
User currently offlineAJRfromSYR From United States of America, joined May 2005, 454 posts, RR: 0
Reply 9, posted (8 years 8 months 2 weeks 2 days 20 hours ago) and read 4622 times:

It's not free money...


-AJR-
User currently offlineN79969 From , joined Dec 1969, posts, RR:
Reply 10, posted (8 years 8 months 2 weeks 2 days 19 hours ago) and read 4516 times:

The 787 is not only an entirely new airplane but represents a very new way of building them....Boeing made a big leap.

User currently offlineIkramerica From United States of America, joined May 2005, 21516 posts, RR: 60
Reply 11, posted (8 years 8 months 2 weeks 2 days 19 hours ago) and read 4514 times:

Quoting APFPilot1985 (Reply 7):
I work with Aluminum fabrication and machining and I can attest that it sucks to work with and its very wasteful

Do you take the remainder and resource it in any way? Melt it and sell it as scrap?

Too sharp and not absorbent enough to use as cat sand...



Of all the things to worry about... the Wookie has no pants.
User currently offlineAPFPilot1985 From , joined Dec 1969, posts, RR:
Reply 12, posted (8 years 8 months 2 weeks 2 days 19 hours ago) and read 4496 times:

Quoting Ikramerica (Reply 13):
Do you take the remainder and resource it in any way? Melt it and sell it as scrap?

Too sharp and not absorbent enough to use as cat sand...

Yeah we sell it as scrap but at a very very discounted rate....And you arent kidding about sharp, my hands can attest to that.


User currently offlineAither From South Korea, joined Oct 2004, 858 posts, RR: 0
Reply 13, posted (8 years 8 months 2 weeks 2 days 19 hours ago) and read 4485 times:

Quoting N1786b (Reply 5):

And Q3 2005, Airbus was able to get $436million of credits from COFACE FRANCE for the delivery of 26 planes

U should not talk about things you obvisouly don't know much about.

Anyway what sources : Continental, Aboulafia,...

[Edited 2005-12-22 01:49:13]


Never trust the obvious
User currently offlineZvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 64
Reply 14, posted (8 years 8 months 2 weeks 2 days 19 hours ago) and read 4472 times:

Quoting Ikramerica (Reply 13):
Too sharp and not absorbent enough to use as cat sand...

... depends on how much one likes cats.  Smile


User currently offlineDL021 From United States of America, joined May 2004, 11447 posts, RR: 75
Reply 15, posted (8 years 8 months 2 weeks 2 days 18 hours ago) and read 4371 times:
Support Airliners.net - become a First Class Member!

Exim Bank has been financing large purchases for our trading partners in more areas than just aviation products for over 70 years. They are not some US effort to lend some perceived advantage to Boeing over Airbus, its simply a tool that every exporting nation uses to facilitate growth in exports for our nation.


Is my Pan Am ticket to the moon still good?
User currently offlineElvis777 From United States of America, joined Aug 2005, 360 posts, RR: 3
Reply 16, posted (8 years 8 months 2 weeks 2 days 18 hours ago) and read 4332 times:

Aither,

I am willing to listen to you. But I need more info. Can you tell me why you claim that he does not know what he is talking about? You obviously do not agree with him so you must have a source that directly discredits this information. Can you please post them

Thank you.

Peace

Elvis777



Leper,Unevolved, Misplaced and Unrepentant SportsFanatic and a ZOMBIE as well
User currently offlineN1786b From United States of America, joined Sep 2005, 559 posts, RR: 17
Reply 17, posted (8 years 8 months 2 weeks 2 days 12 hours ago) and read 4090 times:

Quoting Elvis777 (Reply 18):
I am willing to listen to you. But I need more info. Can you tell me why you claim that he does not know what he is talking about? You obviously do not agree with him so you must have a source that directly discredits this information. Can you please post them

Yeah, let's see your sources.

I must say EADS.NET, TIMES.CO.UK and COFACE.FR are pretty good sources for my claims that Airbus also gets export financing from European ExIm Banks.

- n1786b


User currently offlineQutaiba From Kuwait, joined Dec 2005, 47 posts, RR: 0
Reply 18, posted (8 years 8 months 2 weeks 2 days 12 hours ago) and read 4068 times:

Questions:

1. with the Fed bank increasing the discount rate, how is that affetcing the aircraft finance & lease market?

2. does Exim provide lower interest rates? or is it the better government to government financing option? (EK is government owned).



When the tide comes in, all ships will rise
User currently offlineKaneporta1 From Greece, joined May 2005, 739 posts, RR: 12
Reply 19, posted (8 years 8 months 2 weeks 2 days 11 hours ago) and read 3974 times:

It may be a lot more wasteful to use aluminum, but it's A LOT cheaper to buy and A LOT easier to assemble. Marketwatch may claim there is so much waste and how composite materials are built up, but they fail to comment on how much more expensive it is to build them up. And don't even get me started on assembly and being within all the specified tolerances, it will be way more difficult and time consuming.


I'd rather die peacefully in my sleep, like my grandfather, not terrified and screaming, like his passengers
User currently offlineGARPD From UK - Scotland, joined Aug 2005, 2649 posts, RR: 4
Reply 20, posted (8 years 8 months 2 weeks 2 days 11 hours ago) and read 3952 times:

Quoting Kaneporta1 (Reply 19):
It may be a lot more wasteful to use aluminum, but it's A LOT cheaper to buy and A LOT easier to assemble. Marketwatch may claim there is so much waste and how composite materials are built up, but they fail to comment on how much more expensive it is to build them up. And don't even get me started on assembly and being within all the specified tolerances, it will be way more difficult and time consuming.

And sadly you fail to realise that Boeing has spent the last few years developing ways to make the process much cheaper. It would seem they have succeeded, otherwise the whole 787 idea would be useless and too expensive to launch



arpdesign.wordpress.com
User currently offlineKaneporta1 From Greece, joined May 2005, 739 posts, RR: 12
Reply 21, posted (8 years 8 months 2 weeks 2 days 10 hours ago) and read 3897 times:

Quoting GARPD (Reply 20):
And sadly you fail to realise that Boeing has spent the last few years developing ways to make the process much cheaper. It would seem they have succeeded, otherwise the whole 787 idea would be useless and too expensive to launch

Do you actually know any details about 'the process'??? The fact that Boeing managed to reduce costs doesn't mean that composite manufacturing is anywhere as cheap as aluminum. What YOU fail to realize is that the last year or so the 787 has got a few more metal parts instead of composites because of ease of manufacturing and ability to meet all aerodynamic tolerances. I don't have a source for this online, it's inside information. You also fail to realize that a cheaper composite manufacturing process doesn't mean a cheaper airplane by itself. There are many other cutting edge technologies and assembly line optimizations used to build the 787 that bring the price down.



I'd rather die peacefully in my sleep, like my grandfather, not terrified and screaming, like his passengers
User currently offlineJush From Germany, joined Apr 2005, 1636 posts, RR: 3
Reply 22, posted (8 years 8 months 2 weeks 2 days 10 hours ago) and read 3883 times:

I certainly would love to be in one of these talks about a possible order.
With both of them airbus and boeing just to see what they really tell you about the aircraft. With these figures we really could compare the planes here.
We're always just dead guessing.

Regds
jush



There is one problem with airbus. Though their products are engineering marvels they lack passion, completely.
User currently offlineJoni From , joined Dec 1969, posts, RR:
Reply 23, posted (8 years 8 months 2 weeks 2 days 10 hours ago) and read 3869 times:

Here is another take on the low 787 price tag, from EADS:

Such a negotiation should also address the short-term issue of the two competing new aircraft, the Airbus A350 and the Boeing 787. This latter has become the world�s most subsidised airliner ever. Boeing has amassed more than US$ 5 billion in government subsidies to pay for its development and production, through US and foreign govern- ment R&D funds, tax relief schemes and launch aid. New subsidies are being added every day. But for these subsidies, Boeing could not have launched the 787, which is currently being dumped on the market at unprecedented low prices.

http://www.eads.net/web/lang/en/800/...F00000000400004/1/48/40707481.html


User currently offlineGARPD From UK - Scotland, joined Aug 2005, 2649 posts, RR: 4
Reply 24, posted (8 years 8 months 2 weeks 2 days 10 hours ago) and read 3861 times:

Quoting Kaneporta1 (Reply 21):
Do you actually know any details about 'the process'??? The fact that Boeing managed to reduce costs doesn't mean that composite manufacturing is anywhere as cheap as aluminum. What YOU fail to realize is that the last year or so the 787 has got a few more metal parts instead of composites because of ease of manufacturing and ability to meet all aerodynamic tolerances. I don't have a source for this online, it's inside information. You also fail to realize that a cheaper composite manufacturing process doesn't mean a cheaper airplane by itself. There are many other cutting edge technologies and assembly line optimizations used to build the 787 that bring the price down.

I didn't say a cheaper process = a cheaper built plane. Nor did I say there were no metal parts added.

My point was, you made it sound like composites are fantastically expensive to produce and are not the best choice. I challenged you by stating that boeing have found ways to make it cheaper. Not cheaper than metal, or cheaper than anythign for that matter. Just more cost effect than what you seem to be suggesting.



arpdesign.wordpress.com
25 BoomBoom : The best defense is good offense. What would you expect Airbus to say? The fact is that every subsidy Airbus alleges Boeing gets, Airbus also gets. B
26 N328KF : If I were Boeing's management group, I would put that on banners around every Boeing facility, and make sure it gets recounted at press events.
27 Daedaeg : Could you imagine the uproar if Vice President Cheney stated that the US will give Boeing the means to win the battle against Airbus?
28 Areopagus : Thank you, Joni! I knew we could count on you.
29 Post contains images GARPD : " target=_blank>http://www.eads.net/web/lang/en/800/....html EADS are hardly going to pat Boeing on the back for a job well done are they? Of course t
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