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Boeing Close To Breakeven On 787  
User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Posted (8 years 3 months 5 days 22 hours ago) and read 11824 times:

Not much to this article other than the comment by a Boeing official that they are close to breaking even on the 787 program--well before first flight!
http://www.bernama.com/bernama/v3/news_lite.php?id=198770

Quote:
Boeing's 787 Dreamliner has won nearly 400 orders from airlines before its planned entry into service in 2008, he said during his presentation at the convention.
"And we are now almost at break even," said Walters.



"When all is said and done, more will be said than done".
62 replies: All unread, showing first 25:
 
User currently offlineArt From United Kingdom, joined Feb 2005, 3382 posts, RR: 1
Reply 1, posted (8 years 3 months 5 days 21 hours ago) and read 11761 times:

Well done Boeing! Sounds like they will make an average ca $25 million per frame on the the first 400. That margin can only go up, surely... assuming no severe composite nasties come to light in the next few years.

User currently offlineScouseflyer From United Kingdom, joined Apr 2006, 3387 posts, RR: 9
Reply 2, posted (8 years 3 months 5 days 21 hours ago) and read 11750 times:

Well actually they'll break-even if all of those orders are delivered and the bills paid - they've not got back the cash they invested yet!

It's very unlikely to go wrong but I bet that Concorde was almost in the same place - didn't it have over 100 orders before everyone started to cancel.......


User currently offlineArt From United Kingdom, joined Feb 2005, 3382 posts, RR: 1
Reply 3, posted (8 years 3 months 5 days 21 hours ago) and read 11721 times:

Quoting Scouseflyer (Reply 2):
It's very unlikely to go wrong but I bet that Concorde was almost in the same place - didn't it have over 100 orders before everyone started to cancel.......

IIRC correctly, it reached 72 or 74 and most were not firm orders.

Edit: Or even if they were firm orders, the deposits given were very small and the cost of cancellation was therefore negligible.

[Edited 2006-05-21 14:29:40]

User currently offlinePavlin From , joined Dec 1969, posts, RR:
Reply 4, posted (8 years 3 months 5 days 21 hours ago) and read 11667 times:

They have around 350 firm orders and they have not reached breakeven?
A 8 billion euro A380 has a breakeven of 250-300 planes.


User currently offlineScouseflyer From United Kingdom, joined Apr 2006, 3387 posts, RR: 9
Reply 5, posted (8 years 3 months 5 days 21 hours ago) and read 11667 times:

Quoting Art (Reply 3):
Quoting Scouseflyer (Reply 2):
It's very unlikely to go wrong but I bet that Concorde was almost in the same place - didn't it have over 100 orders before everyone started to cancel.......

IIRC correctly, it reached 72 or 74 and most were not firm orders.

No problem, I knew it was quite a few.


User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 6, posted (8 years 3 months 5 days 21 hours ago) and read 11653 times:

Quoting Pavlin (Reply 4):
They have around 350 firm orders and they have not reached breakeven?

Plus another 40 or so firm orders that need to be signed, plus a slew of options and committments. See the Wikipedia entry under 787 for a good breakdown. In my view, to be close to BEP and not having flown the aircraft is a stupendous achievement. No doubt this project will be firmly ensconsed "in the black" by the time it takes to the air. How many other commercial aircraft could make the same boast?

Quoting Art (Reply 1):
Well done Boeing!

Well done, indeed!  thumbsup 



"When all is said and done, more will be said than done".
User currently offlineAtmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 38
Reply 7, posted (8 years 3 months 5 days 21 hours ago) and read 11607 times:

Quoting Pavlin (Reply 4):
They have around 350 firm orders and they have not reached breakeven?
A 8 billion euro A380 has a breakeven of 250-300 planes.

The pricing model for the 787 would take into account competition, market size, and launch discounts. Because of the first item, break even would be higher, but because of the 2nd item, Boeing can afford to set pricing so that the break even would be higher.

But I think a more important question is how long does it take to break even. Given the expected delivery rates, Boeing should break even in around 5 years after 787 EIS, while the A380 break even will take 6 to 7 years after EIS. Boeing could break even on the 787 before Airbus does on the A380.



ConcordeBoy is a twin supremacist!! He supports quadicide!!
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 8, posted (8 years 3 months 5 days 20 hours ago) and read 11570 times:

From Boeing's viewpoint, the best aspect of it is that, now that the A350 is on hold, they know there'll be no competition for five or six years. It's not often that a manufacturer in any field achieves a market ascendancy like that.

Apart from anything else, that makes a second 787 line a virtual certainty.



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineLeelaw From , joined Dec 1969, posts, RR:
Reply 9, posted (8 years 3 months 5 days 20 hours ago) and read 11519 times:

Quoting NAV20 (Reply 8):
apart from anything else, that makes a second 787 line a virtual certainty.

I wouldn't bet the farm on that just yet, I've heard rumors recently that a couple of the risk sharing partners are getting antsy about the financial commitments necessary for such a ramp-up.


User currently offlineArt From United Kingdom, joined Feb 2005, 3382 posts, RR: 1
Reply 10, posted (8 years 3 months 5 days 20 hours ago) and read 11481 times:

Quoting Leelaw (Reply 9):
Quoting NAV20 (Reply 8):
apart from anything else, that makes a second 787 line a virtual certainty.

I wouldn't bet the farm on that just yet, I've heard rumors recently that a couple of the risk sharing partners are getting antsy about the financial commitments necessary for such a ramp-up.

While I appreciate that risk sharing partners may be uneasy about extending themselves further financially, I would have thought that an important factor in making a decision on a second line would be knowing the nature of any 787 competitors. Airbus say they will emerge from their analysis paralysis within 2 months and release details of the "definitive" 787 competitor.


User currently offlineScouseflyer From United Kingdom, joined Apr 2006, 3387 posts, RR: 9
Reply 11, posted (8 years 3 months 5 days 20 hours ago) and read 11436 times:

Quoting Art (Reply 10):
While I appreciate that risk sharing partners may be uneasy about extending themselves further financially, I would have thought that an important factor in making a decision on a second line would be knowing the nature of any 787 competitors. Airbus say they will emerge from their analysis paralysis within 2 months and release details of the "definitive" 787 competitor.

Which means that they're likely to come out with something that will match the 87 and the suppliers don't want to build a new factory and then have to shut it down again after 2 or 3 years.

It's always better to under produce the market than over produce it (as then you can get top price for your goods) - look at what the games console manufacturs do!


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 12, posted (8 years 3 months 5 days 20 hours ago) and read 11419 times:

See your point, Art, but as I see it, Boeing will soon have a pretty good idea of what the competition will be like; depending on which way the Airbus cat jumps over the next month or two. There are really two alternative scenarios:-

Either 1. Airbus announces a 'new' model in June or July. There won't have been time to produce even a preliminary design for a fully-competitive counter to the 787 (i.e. fully-composite construction, new engines etc.), so Boeing can be pretty sure that the counter will be the 'A350 Mark Five' - another relatively heavy, relatively thirsty half-measure.

Or 2. Airbus says that it is going to develop a completely-new, all-composite design. That will not carry conviction in the market until design development of both airframe and engines has been carried to quite a detailed level, which will take at least a year, probably two. So Boeing will know that Airbus won't even be able to sign up firm orders on a settled and proven design until about 2008. On their recent record, no-one is going to order an Airbus design 'off the back of an envelope', they'll have to prove out the claimed performance figures and put them beyond doubt.

So either Boeing won't have any competition worth worrying about - or they'll have 5-6 years clear to 'make hay while the sun shines'.



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineStitch From United States of America, joined Jul 2005, 30890 posts, RR: 87
Reply 13, posted (8 years 3 months 5 days 19 hours ago) and read 11347 times:
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Assuming the A350 program is "stalled" until the mid-2010s (2013-2017), that might take some of the pressure off Boeing to build a second line, since they can force customers to wait (by still being able to deliver product before the A350MkV enters service) or it may allow Boeing to command enough of a premium to help shoulder the burden of their suppliers ramping up production to support a second line.

So Boeing can tell SQ and EK they can get the 787-8 for a discount and wait till 2012, or they can pay full list and get it in 2010. It would then depend on how fast and how badly they want the plane.


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 14, posted (8 years 3 months 5 days 19 hours ago) and read 11319 times:

I think that's dead right, Stitch. The late-ordering airlines will either have to wait, or pay Boeing (and its suppliers) top dollar to compensate for the extra risk.

One of Boeing's problems may simply be that they can't believe their luck - that they've been handed a virtual monopoly on a plate. Airbus' challenge in the midsize longhaul sector has crumbled so quickly that it has taken everyone by surprise.



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineHalibut From , joined Dec 1969, posts, RR:
Reply 15, posted (8 years 3 months 5 days 18 hours ago) and read 11070 times:

Quoting NAV20 (Reply 12):

So either Boeing won't have any competition worth worrying about - or they'll have 5-6 years clear to 'make hay while the sun shines'.


NAV20,
Excellent discription of the " Pickle " !

No matter what Airbus does , Boeing will still be raking in the dough ! Airbus ...? Most likely not !

Hmmm

  

http://www.bizjournals.com/seattle/stories/2006/05/08/daily34.html

Quoting Puget Sound Business Journal]

Boeing raises prices 4 percent
Puget Sound Business Journal (Seattle) - May 12, 2006

The 787-9 plane, for example, Boeing's longer-range version of its Dreamliner airplane, has a list price of $178.5 million to $188 million.
[/quote]

Quoting Manni (Reply 15):
Quoting Lumberton (Reply 6):
Plus another 40 or so firm orders that need to be signed,

Firm orders that need to be signed? In other words... commitments. Of which most likely some never will be signed (Primaris ).

Manni
I thought you count both commitments & firm orders ? Oh , you have a different system of counting orders/commitments for Airbus & Boeing !  

  

Quoting Manni (Reply 10):

Aeroflot Has Chosen The A350 Over The 787? (by FCKC May 6 2006 in Civil Aviation)

[quote=Manni-:
Quoting Manni (Reply 10):

If you'd like to count firm orders only, that's up to you. Meanwhile, I count both firm and commitments, announced by Airbus. Which at this stage excludes the Air Madrid order and those of Aeroflot.

Halibut

[Edited 2006-05-21 17:30:44]

User currently offlineThorny From , joined Dec 1969, posts, RR:
Reply 16, posted (8 years 3 months 5 days 18 hours ago) and read 11056 times:

Quoting Scouseflyer (Reply 11):

Which means that they're likely to come out with something that will match the 87 and the suppliers don't want to build a new factory and then have to shut it down again after 2 or 3 years.

2-3 years later would be right about the time Boeing's 737RS enters service. Boeing could very easily sweeten the deal by adding a contract clause that said suppliers would get first dibs on 737RS work. That would be very enticing, and a win/win for Boeing.


User currently offline11Bravo From United States of America, joined Feb 2005, 1718 posts, RR: 10
Reply 17, posted (8 years 3 months 5 days 18 hours ago) and read 11021 times:

Quoting Manni (Reply 15):
Firm orders that need to be signed? In other words... commitments.

Exactly. I've said it about Airbus orders and I'll say it about Boeing orders; playing games with terms like "firm commitments", or in this case "Firm orders that need to be signed?" is pure spin and means nothing.

The signing of an order is the act that makes it firm. There is no such thing as a "Firm order that needs to be signed". It's a contradiction in terms. It's like saying "The dead dog needs to be killed".

The orders are either firm or they're not. The B787 has 350 firm orders.



WhaleJets Rule!
User currently offlineEMBQA From United States of America, joined Oct 2003, 9364 posts, RR: 11
Reply 18, posted (8 years 3 months 5 days 18 hours ago) and read 10933 times:

Quoting Pavlin (Reply 4):
A 8 billion euro A380 has a breakeven of 250-300 planes.

Where did you get the A380 break even figure from...?? Airbus has never released it and the industrey guess is close to the same as the B787....400



"It's not the size of the dog in the fight, but the size of the fight in the dog"
User currently offlineArt From United Kingdom, joined Feb 2005, 3382 posts, RR: 1
Reply 19, posted (8 years 3 months 5 days 18 hours ago) and read 10933 times:

Quoting Manni (Reply 15):
Quoting Lumberton (Reply 6):
Plus another 40 or so firm orders that need to be signed,

Firm orders that need to be signed? In other words... commitments. Of which most likely some never will be signed (Primaris ).

Manni, you make it sound as if the 787 is in a precarious position, order-wise. Would it matter if none of the 40 frames mentioned ever turned into firm orders? I don't think so.

Just to recap on the 787's position:

- market for mid-sized long range wide bodies estimated at 3000+ up to 2025

- 787 has secured 350+ orders/commitments in about 2 years

Boeing's problem is not getting orders. I would venture that their concern is how to exploit the runaway success of the 787 in the market to give themselves the biggest return possible from that success (IMO for which they have to thank Airbus, to some extent, given their reluctance to respond in timely fashion with a viable alternative).

I think Nav20 puts the position succinctly in his reply number 12.


User currently offlineSWALoveField From United States of America, joined Jan 2005, 179 posts, RR: 0
Reply 20, posted (8 years 3 months 5 days 17 hours ago) and read 10780 times:

Could all of this 787 success financially equal some big time cash for the 737 replacement?

Robb
Dallas, TX


User currently offlineHalibut From , joined Dec 1969, posts, RR:
Reply 21, posted (8 years 3 months 5 days 17 hours ago) and read 10645 times:

Quoting SWALoveField (Reply 20):
Could all of this 787 success financially equal some big time cash for the 737 replacement?

And then some !
In my oppinion , 2010 thur 2014 is Boeing's sweet spot !

Quoting NAV20 (Reply 12):
So either Boeing won't have any competition worth worrying about - or they'll have 5-6 years clear to 'make hay while the sun shines'.

Quote of the Year !

 praise  NAV20

Halibut


User currently offlineSirOmega From United States of America, joined Sep 2005, 735 posts, RR: 0
Reply 22, posted (8 years 3 months 5 days 17 hours ago) and read 10414 times:

How does -10 development factor in on this? I expect a lot of orders to show up when the -10 is annouced. I assume it'll add some extra development cost to the project, but it wouldn't surprise me if those costs are immediately offset (either entirely or mostly) by the number of -10 purchases.

User currently offlineBoomBoom From , joined Dec 1969, posts, RR:
Reply 23, posted (8 years 3 months 5 days 16 hours ago) and read 10312 times:

Quoting Pavlin (Reply 4):
They have around 350 firm orders and they have not reached breakeven?
A 8 billion euro A380 has a breakeven of 250-300 planes.

Smaller plane=smaller proft, even though the development cost is nearly as large as a big plane. It's the same situation with autos.

Nobody knoes what the breakeven number is for the A380. Airbus put out a bunch of contradictory information, then went mum.

Quoting Art (Reply 19):
Manni, you make it sound as if the 787 is in a precarious position, order-wise.

You would think the whole 787 program depends on the Primairs order. NOT!


User currently offlineShowerOfSparks From , joined Dec 1969, posts, RR:
Reply 24, posted (8 years 3 months 5 days 16 hours ago) and read 10139 times:

Quoting Pavlin (Reply 4):
They have around 350 firm orders and they have not reached breakeven?
A 8 billion euro A380 has a breakeven of 250-300 planes.

Yes, but can you actually believe those numbers for the A380, I think not.


25 Astuteman : That's pretty much it, BoomBoom. IIRC analysts have said Boeing will need to sell c. 500 frames to break even, which to me sounds pretty reasonable f
26 Leelaw : IIRC, Mr. Champion of Airbus, in his recent "Hard Talk" interview with Sarah Montague on the BBC, either said directly or confirmed Ms. Montague's fi
27 Irishpower : Well done Astuteman. I like your financial breakdown. Realistically speaking though discounted cash flows at 10% for a project as large as the A380 i
28 YULWinterSkies : Then with 350 orders, they are still quite far from breakeven, so this is nothing else that propaganda from Boeing. But why should we bother about th
29 Leelaw : Breakeven Point (Cost-Volume-Profit Analysis) is really an "infantile" method of evaluating the financial success of a long-term project, because it d
30 Post contains images Astuteman : It's the standard "cost-of-capital" model used by both Boeing and Airbus (+ or - a 1/4%) in order to determine DCF or NPV values . I could probably l
31 Post contains images DeltaGuy767 : Kudos for Boeing for getting close to Break Even this early in the program. Also once the US carriers get their acts together then we will see large o
32 Jacobin777 : i still think he's touting the mpany rubbish.......300-350 (possibly 375-400) are the numbers. and how can the price be 200-300 since 2001-2002, befo
33 Patches : maybe this question has been asked. When will we see a real 787? instead of a fake drawing or a computer generated picture. I MEAN THATS ALL WE HAVE S
34 Post contains links and images Brendows : You can see what the 787 will be like here: Technical drawings of the 787 Take a look on boeing.com, they posted images of the firm design last fall
35 Post contains images PlaneHunter : If Airbus presents a competitive updated A350, they are certainly able to offer it earlier than 2012. Not every customer out there needs the aircraft
36 AirRyan : Maybe Boeing will consider the 787 for the USAF KC tanker, than? IMO, the first builder to offer either the A350 or the 787 will get the bid. The USAF
37 FlyDreamliner : I'd heard more recently, I believe here on A.net that projected break even was supposed to be somewhere shy of 400 units on A380 - due to projected d
38 HB88 : I'm not sure. According to the media and Boeing, it's proving extremely difficult for Boeing to implement and certify effective EME protection for li
39 Jacobin777 : actually not, according to flightinternational.com " Under the revised schedule, first delivery is expected to be no earlier than 2012." by the time
40 PlaneHunter : I didn't talk about deliveries, but their ability to actively offer the model years before EIS. Airbus would not be locked out of tenders in the next
41 474218 : Boeing is a long way from BREAK EVEN on the 787. When an customer signs a firm contract for an new aircraft they pay a small payment (1 to 5 percent o
42 Lokey123 : I don't think that your math quite adds up. As far as I know when a firm contract is signed the deposit is something like 30 percent of the purchase
43 Post contains images Jacobin777 : got ya..
44 Lredlefsen : I wonder if that includes all the $$$ they spent on the Sonic Cruiser?
45 Stitch : I've been told by Boeing Sales folks who I used to shoot the breeze with up at Paine that it's usually one-third down on order, one-third down once t
46 474218 : Doesn't add up 5% down, 4 milestone payments at 10% each = 45% + 55% at delivery? Adds up to 100%. Unless thing have really changed in the last thirt
47 Scouseflyer : I think that Boeing said that a 787 tanker was not possible at it would require a bigger hole in the fuselage than was possible with a Cardon constru
48 Post contains images Glideslope : Good point. At least with the A380 operators are not ordering in the first place.
49 Keesje : Very good! So break-even in 5 or 6 years if everything goes well!
50 Post contains images Manni : Yes commitments and firm orders, but wont call commitments firm orders that need to be signed. Not at all. But I've noticed that you were very quick
51 Post contains images BoomBoom : However, it's looking like the breakeven for the A380 is never. NOT very good!
52 PlaneHunter : 1. A comparison of the A380 to Concorde is ridiculous and shows a total lack of knowledge about aviation history. 2. Have you ever checked the A380 o
53 Halibut : Herer we go again , On the Aeroflot thread you were attempting to combine both firm orders & firm order commitments . If Boeing were to pull the old
54 Post contains links NAV20 : Agree entirely, I don't push 'commitments' either. Here's what can happen (Bye bye Qatar..):- "SHARM EL-SHEIKH, Egypt, May 21 (Reuters) - Qatar Airwa
55 Post contains images Joni : Normally, the larger the plane is the larger the margins tend to be, thus the A380 would be expected to break even with fewer units sold than the B78
56 Art : Good question. I don't know the answer. Do you? How many of the 787's launch customers did not receive a heavy discount? I don't know the answer. Do
57 Post contains images NAV20 : Have to say, Joni, that as things have turned out, they'd have been a lot better off taking the (free) advice I and others offered them over a year a
58 Stitch : This is an issue for Airbus, as well. While many of their components are EU-sourced and probably paid for in Euros, they do source from the US, Japan
59 Post contains images Manni : I wasn't attemting anything. I did not mention firm orders and did not mention commitments. I put them all under the term 'orders', without intention
60 PlaneHunter : It seems to be considered as very practical by numerous major premium airlines. I don't know that and you don't either. Only some Airbus guys know th
61 Revelation : They had to most of each other plane from subcontractors too - the only difference is these subcontractors were mostly other parts of Boeing, instead
62 Post contains images Halibut : Yes indeed , It's a good question , re the A380 . No one knows . It's just one of many unaswered questions regarding the Clandestine A380 program , w
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