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Boeing 787 Break-even Point, Where Is It Now?  
User currently offlineKeesje From , joined Dec 1969, posts, RR:
Posted (5 years 11 months 2 weeks 4 days 7 hours ago) and read 18273 times:

.
.
The Boeing 787 has been a very ambitious project from the start, introducing new materials, construction technology, engines and systems and supply chain all in 1 aircraft. The required high investments have paid off in a large order back log of around 900 aircraft as we speak.



During the last few years technical setbacks, supply chain troubles and compensation for hundreds of aircraft delayed (for up to 2.5 yrs) no doubt have changed the break even point for the 787 program. The current test & certification process, production ramp up and 787-9 development will take another bite.

Healthy competition from the combined A330/A350 offerings probably prevented Boeing from setting prices /margins very high.

The twin aisle market segment for the next 20 years is said to be over 5000 aircraft so all participants will be able to recoup there investments / costs within a reasonable period.

Any idea where the break-even number would stand at this moment, 500, 700? more? less? why?


P.S. This thread will be monitored for off topic posts

69 replies: All unread, showing first 25:
 
User currently offlineIkramerica From United States of America, joined May 2005, 21456 posts, RR: 60
Reply 1, posted (5 years 11 months 2 weeks 4 days 7 hours ago) and read 18255 times:

It is higher than it was, but still a number nobody knows except Boeing. Just as it was before the latest delays. So is this just a speculation thread?


Of all the things to worry about... the Wookie has no pants.
User currently offlineDLPMMM From United States of America, joined Apr 2005, 3588 posts, RR: 10
Reply 2, posted (5 years 11 months 2 weeks 4 days 7 hours ago) and read 18216 times:

450 to 550 units.

To my knowledge, there has not been that much compensation offered by Boeing (please site your source where compensation has been paid by Boeing for "hundreds" of planes) and the margins have not been squeezed by the A350 in the manner you have postulated, nor has there been any change in the certification costs or in the planned development costs for the -9 version so there is no unplanned "additional bite".

Why are you starting another flamebait A verses B thread? (and don't be disingenous, you know it will end up that way).


User currently offlineDanny From Poland, joined Apr 2002, 3506 posts, RR: 2
Reply 3, posted (5 years 11 months 2 weeks 4 days 7 hours ago) and read 18198 times:



Quoting Ikramerica (Reply 1):
So is this just a speculation thread?

As much as threads about A380 break even point but that's what discussion forums are for.

There are few factors that push break even point further and further away. One is constantly growing R&D spending as more redesigns are needed. Second is due to pressure from A330/A350XWB combo Boeing sells the 787 at relatively low prices, word in the industry says that it sells for around $15M more than A330. And last but not least the delay compensations which will be massive for 800 frames that are delayed on average by 2 years but some almost 3 years.


User currently offlineDLPMMM From United States of America, joined Apr 2005, 3588 posts, RR: 10
Reply 4, posted (5 years 11 months 2 weeks 4 days 7 hours ago) and read 18107 times:



Quoting Danny (Reply 3):
As much as threads about A380 break even point but that's what discussion forums are for.

There was and still is a big question as to if Airbus will ever reach break-even on the A-380. There is no doubt that Airbus has not yet sold enough planes to break-even.

There is no doubt that Boeing has already reached break-even with the sales it has on the books.


User currently offline9252fly From Canada, joined Sep 2005, 1386 posts, RR: 0
Reply 5, posted (5 years 11 months 2 weeks 4 days 7 hours ago) and read 18070 times:

Don't know much about the breakeven numbers,but I'll hazard to guess the costs will be spread out very nicely. My prediction is 950 sales by first flight and 1000 by first delivery.

User currently offlineKeesje From , joined Dec 1969, posts, RR:
Reply 6, posted (5 years 11 months 2 weeks 4 days 7 hours ago) and read 18052 times:

Boeing choose for an agressive test schedule, EIS and production ramp up. I do not now how many 787 were ordered before the latest delay. It seems likely it will take many years to produce additional aircraft on top of the original contracted production schedules to work away the EIS delayfor all aircraft.

I think most airlines ask compensation when a contract has been broken, I assume the 787 will be no exception. http://english.people.com.cn/90001/90776/90884/6390569.html

Quoting DLPMMM (Reply 2):
margins have not been squeezed by the A350 in the manner you have postulated

Postulated ? There were alternatives and healthy competition. A large number of A330's and A350 were sold since the 787 was launched. That forces both manufacturers to offer sharp prices.

Quoting DLPMMM (Reply 2):
nor has there been any change in the certification costs or in the planned development costs for the -9 version so there is no unplanned "additional bite".

I think significant additional development costs were budgetted last year.


User currently offlineOvercast From United Kingdom, joined May 2005, 158 posts, RR: 0
Reply 7, posted (5 years 11 months 2 weeks 4 days 7 hours ago) and read 18037 times:

I dont' belive that Boeing has ever declared a number for Breakeven, and they have not started to factor in the additional costs that the delays must be causing.

All we can say is that( based on any delayed projects ) is that development costs and breakeven numbers will be rising every time a delay comes along.

When Boeing start to account for this is anybody's guess, but it will happen.


User currently offlineTdscanuck From Canada, joined Jan 2006, 12709 posts, RR: 80
Reply 8, posted (5 years 11 months 2 weeks 4 days 6 hours ago) and read 17988 times:



Quoting Keesje (Thread starter):

During the last few years technical setbacks, supply chain troubles and compensation for hundreds of aircraft delayed (for up to 2.5 yrs) no doubt have changed the break even point for the 787 program. The current test & certification process, production ramp up and 787-9 development will take another bite.

Why are these "another bite"? The test, certification, production ramp up, and 787-9 development are all included in the current program and should be part of the current breakeven number (whatever that is).

Quoting Danny (Reply 3):
Second is due to pressure from A330/A350XWB combo Boeing sells the 787 at relatively low prices, word in the industry says that it sells for around $15M more than A330.

The 787 went on sale before the A350XWB had been defined, so it wasn't priced off of that. It was priced against the A330 and 767. Is there some evidence that the price of the 787 has come down since the launch of the A350XWB?

Quoting Danny (Reply 3):
And last but not least the delay compensations which will be massive for 800 frames that are delayed on average by 2 years but some almost 3 years.

It's extremely unlikely that there are delay payments on all 800 frames. Anything sold after a delay automatically incorporates all prior delays into the schedule.

Quoting Keesje (Reply 6):
I think most airlines ask compensation when a contract has been broken, I assume the 787 will be no exception.

You can't ask for compensation until the contract is actually broken. Until you actually fail to deliver on time, there's no basis for a breach of contract. However, most contracts will have delay clauses written in from the beginning. The contents of those is, I'm sure, a closely guarded secret.

Tom.


User currently offlineDLPMMM From United States of America, joined Apr 2005, 3588 posts, RR: 10
Reply 9, posted (5 years 11 months 2 weeks 4 days 6 hours ago) and read 17943 times:



Quoting Keesje (Reply 6):
Postulated ? There were alternatives and healthy competition. A large number of A330's and A350 were sold since the 787 was launched. That forces both manufacturers to offer sharp prices.

Do you know what prices were before and after introduction of each iteration of the A350? You just like to stir the A verses B pot with generalities. It could be that Boeing was selling the 787 for more than expected at the start due to the pitiful competing aircraft offered in the initial A350 versions. You just don't know, nor do I.

Quoting Keesje (Reply 6):
I think most airlines ask compensation when a contract has been broken, I assume the 787 will be no exception. http://english.people.com.cn/90001/9....html

They can ask all they want, it does not mean they necessarily get anything. I read one report from somewhere that there are airlines that were not happy because Boeing refused to pay compensation, just offered to cancel the order and return the deposits.

You just don't know.

Quoting Keesje (Reply 6):
think significant additional development costs were budgetted last year.

For the -9 version? Why do you think that? I thought those were some development overruns for the -8.

Your just looking for arguments from Boeing fanboys because you are an Airbus fanboy.

I personally could care less since it is not a very interesting business case. There is no doubt that Boeing has already sold enough planes that the program will be a very large success and very profitable.

The same cannot be said for the A380, which was and is a much more interesting business case.


User currently offlineWingedMigrator From United States of America, joined Oct 2005, 2211 posts, RR: 56
Reply 10, posted (5 years 11 months 2 weeks 4 days 6 hours ago) and read 17895 times:



Quoting DLPMMM (Reply 4):
There is no doubt that Boeing has already reached break-even with the sales it has on the books.

Wrong verb tense.

There is no doubt Boeing will reach break-even. Right now they're as deep in the hole as they'll ever be, as you might expect: most of the development money is sunk and deliveries stand at zero.

It's also worth framing the discussion by pointing out that break-even is when you've made zero return on investment, something that investors would frown upon. The true mark of success is to reach a sufficiently positive ROI, something which I have no doubt the 787 program will achieve for Boeing investors in the long term.


User currently offlineFRNT787 From United States of America, joined Sep 2007, 1317 posts, RR: 15
Reply 11, posted (5 years 11 months 2 weeks 4 days 6 hours ago) and read 17879 times:



Quoting Keesje (Reply 6):
I think most airlines ask compensation when a contract has been broken, I assume the 787 will be no exception. http://english.people.com.cn/90001/9...0569.

I dont think Boeing will have to be overly generous in their compensation, due to the fact that now the only available competing aircraft cannot get you much better slots, and certainly not much better economics.

Quoting Keesje (Reply 6):
Postulated ? There were alternatives and healthy competition. A large number of A330's and A350 were sold since the 787 was launched. That forces both manufacturers to offer sharp prices.

I agree. BUT, I think they factored this in, they may have gotten some sales at better than expected margins when there were no A350XWB.

Quoting Keesje (Reply 6):
I think significant additional development costs were budgetted last year.

And I would expect additional R&D spending for the program in the future as well.



"We have a right to fail, because failure makes us grow" --Glenn Beck
User currently offlineAlessandro From , joined Dec 1969, posts, RR:
Reply 12, posted (5 years 11 months 2 weeks 4 days 6 hours ago) and read 17847 times:

Well, nobody knows until you get close. I think Boeing going to suffer many years from these delays and their optimistic scheduling of this aircraft.

User currently offlineDLPMMM From United States of America, joined Apr 2005, 3588 posts, RR: 10
Reply 13, posted (5 years 11 months 2 weeks 4 days 5 hours ago) and read 17784 times:



Quoting Alessandro (Reply 12):
I think Boeing going to suffer many years from these delays and their optimistic scheduling of this aircraft.

And I think that Boeing is going to make gazillions of dollars for many years to come from producing this aircraft.

Both of these opnions and $5 will get you a cup of coffee at Starbucks.


User currently offlineManni From South Korea, joined Nov 2001, 4221 posts, RR: 23
Reply 14, posted (5 years 11 months 2 weeks 4 days 5 hours ago) and read 17706 times:

The developments costs were estimated to be around US$ 8 billion, when the plane was first launched. Adding 18 months (so far) to the development cycle will considerably increase that number (think of the wages the thousands of engineers get working on the 787, the redesigning of parts, etc.).

IIRC a figure of upto US$4 billion was floating around in regards to compensation for delivery delays concerning almost 800 aircraft.

To much speculation? Perhaps. That the total cost will reach US$13 to 14 billion seems plausible. Figure in that some of the first batches of 787s were sold for as low as US$60 to 70 million (think QF), and I conclude Boeing must be a happy camper if the break even number is still reached.

http://www.leeham.net/filelib/ScottsColumn_2_041508.pdf



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User currently offlineStitch From United States of America, joined Jul 2005, 30415 posts, RR: 84
Reply 15, posted (5 years 11 months 2 weeks 4 days 4 hours ago) and read 17643 times:
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787 margins remain robust as "launch discounting" was quite low (some figures I have seen show it to be under 25%). Airlines really wanted this plane so Boeing didn't have to cut deep to garner orders. Boeing is easily clearing nine figures profit on each model so at 900 frames that is well over $9 billion in profit. And based on the contracts I have seen and the ones I have been told about, the actual figure should be multiples of that.

So the 787 program is currently tasked to generate a positive RoI even with the cost overruns, the compensation payments, and possible future cancellations due to airlines pulling back on their capital expenditures.

 thumbsup 


User currently offlineDLPMMM From United States of America, joined Apr 2005, 3588 posts, RR: 10
Reply 16, posted (5 years 11 months 2 weeks 4 days 4 hours ago) and read 17593 times:



Quoting Manni (Reply 14):
and I conclude Boeing must be a happy camper if the break even number is still reached.

And I conclude that Boeing will reach break even on the first 100 units delivered.

My conclusion is as valid as yours given the information publicly available.

I just don't understand why Keesje didn't just title this thread "Recap of 787 Program Problems" as that is what he intended.


User currently offlineCARST From Germany, joined Jul 2006, 809 posts, RR: 1
Reply 17, posted (5 years 11 months 2 weeks 4 days 4 hours ago) and read 17516 times:



Quoting Manni (Reply 14):
To much speculation? Perhaps. That the total cost will reach US$13 to 14 billion seems plausible. Figure in that some of the first batches of 787s were sold for as low as US$60 to 70 million (think QF), and I conclude Boeing must be a happy camper if the break even number is still reached.

Completely wrong. Happy to reach the break even?

Let's assume a very high costs for R&D and compensation costs: 15 billion $.

15.000.000.000 $ / 70.000.000 $ per frame = 214 frames


I think your numbers are still too low and the real costs are much higher, but still, if the overall costs for the program already reached the 30 to 40 billion $ Boeing will make so much money with this airplane.


And i wouldn't underestimate how much of the research costs for cfrp materials can be spread around on future Boeing projects using the same technology; e.g, 737 and 777 replacements.


User currently offlineAirFrnt From United States of America, joined Jul 2004, 2823 posts, RR: 42
Reply 18, posted (5 years 11 months 2 weeks 4 days 3 hours ago) and read 17449 times:



Quoting Keesje (Thread starter):

Any idea where the break-even number would stand at this moment, 500, 700? more? less? why?

I will use the standard Airbus cheerleader response when others questioned the insanely rosy predictions around the A380 in light of the production problems on a much less popular plane. It's probably shifted from 100 to 150.

I expect that we will get a thorough report form Boeing at some point on how much the design problems hurt - no EADS to hide the books behind.


User currently offlineManni From South Korea, joined Nov 2001, 4221 posts, RR: 23
Reply 19, posted (5 years 11 months 2 weeks 4 days 3 hours ago) and read 17395 times:



Quoting CARST (Reply 17):
Completely wrong.

 scratchchin 

Quoting CARST (Reply 17):
15.000.000.000 $ / 70.000.000 $ per frame = 214 frames

Let's not forget the actual cost to build the aircraft (labor, materials etc.).



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User currently offlineRedFlyer From United States of America, joined Feb 2005, 4312 posts, RR: 29
Reply 20, posted (5 years 11 months 2 weeks 4 days 3 hours ago) and read 17289 times:



Quoting WingedMigrator (Reply 10):
Right now they're as deep in the hole as they'll ever be, as you might expect: most of the development money is sunk and deliveries stand at zero.

People also forget that Boeing isn't on the line financially on the 787 as it has been (or it's competitor has been) on prior airplane programs since their development costs have been distributed throughout the supply chain. That makes a big difference to the bottom line if your breakeven point starts to shift during production ramp-up.



I'm not a racist...I hate Biden, too.
User currently offlineNorCal From United States of America, joined Mar 2005, 2459 posts, RR: 5
Reply 21, posted (5 years 11 months 2 weeks 4 days 2 hours ago) and read 17199 times:



Quoting Manni (Reply 14):

If Boeing made $16.6 million profit on each of the 900 planes they have sold, they would recoup $15 billion worh of development costs.

For comparison the A380 needs to make $95 million in profit per frame to recoup $19 billion in development. Or $75 million in proft per frame to recoup $15 billion dolar development.

Don't know what the margins are on either but there is a comparison for those wondering.


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 22, posted (5 years 11 months 2 weeks 4 days 2 hours ago) and read 17180 times:

Whatever the breakeven point for the 787 is, it won’t be the same today as it was yesterday; and it will be different again tomorrow.

For any major project breakeven depends on cash flow (usually estimated on a monthly basis). At the feasibility stage you put every dollar you expect to spend into the expenditure column, add interest (again, at an estimated rate) on the outstanding amount, and organise your model to show a cumulative (and initially, of course, entirely negative) balance.

Incidentally, even if you plan to use reserves of cash to pay some of the cost, you still allow interest on it; because simple logic says that if you hadn’t spent it on the project it would be earning you money elsewhere. 'Money costs money.'

Further down the model you put in (again, on an estimated basis) expected income. The model deducts this from the outstanding balance as revenue is expected to be received. When that balance is reduced to zero, that is the ‘breakeven point.’

However, ‘breakeven’ has little or no relevance in business terms. Unless you’re a charity you’re looking for profit on the money that you have invested, not mere ‘breakeven.’ In my own field, we aimed for a minimum of a 20% return on the capital invested, including all accumulated interest during the development period. If the model showed a minimum total returns of 120% of the capital invested, including accumulated interest, within a reasonable time and without undue ‘exposure’ for too long a period, the project could be said to be ‘viable.’

However, that is only the first step. At that stage you are working on estimates only; of costs, interest rates, sale prices, production rates, ‘rates of sale,’ etc. The solution to that problem is to update the model with the real figures as they are ascertained; on a monthly, daily, or even hourly basis, as required. I was very proud of an early cash flow model I produced myself (in the humble Lotus123!) which would merge the actual and the estimated figures, and re-calculate the ‘bottom line’ according to any changes in key variables, in a few seconds.

I haven’t mentioned inflation, for a good reason. It is impossible to estimate. But, in any case, the ‘saving grace’ is that, over a period of years, inflation tends to ‘even out.’ If costs rise, prices tend to follow them, as do interest rates; but market forces tend in the end to bring things back to some sort of equilibrium. Of course, if you’re unlucky, and start a project at precisely the wrong stage in the cycle, you stand to lose your shirt; but that’s business, that’s why you are entitled to look for a profit (better described as a ‘return on risk’) if you take the risks and get the timing right.

Sorry to go on, but I hope that I’ve shown that neither Boeing nor Airbus know the precise moment at which ‘breakeven’ will occur on any of their new aeroplanes. Nor is it awfully relevant, since both firms have accepted firm orders. Boeing is irrevocably committed to the 787, and Airbus is in similar case with both the A380 and the A350.

What matters to both firms is how quickly they can get the things into the air and out of the door in their final form – and I include the A380 in that, since up to now Airbus are still delivering ‘one-offs’ in terms of wiring.

I’m quite sure that all three cash flow models in both firms are still heavily dependent on ‘estimates,’ particularly estimates of the rate of volume production that can be achieved. In terms of ‘breakeven’ and subsequent progression into profit, my guess is that Boeing have enough orders already to be able to ‘see’ those events in the case of the 787, and that Airbus are at or near that point with the A350; whereas Airbus will need a lot more orders before they can see daylight on the A380.

But that, in all three cases, those expectations can only be ‘IAGW’ (‘If All Goes Well’) estimates at the present time.

[Edited 2008-07-29 20:44:49]


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineKen777 From United States of America, joined Mar 2004, 8162 posts, RR: 8
Reply 23, posted (5 years 11 months 2 weeks 4 days 1 hour ago) and read 17063 times:

I think that Boeing is in a reasonably good position because of their 787 partners, who would also be risk partners. While the partnership agreement isn't public I have no doubts that those partners who cause compensation for delays will be helping pay that compensation.

Boeing also has the ability (if they wish) to channel some of the R&D costs to Y1 - they have indicated in the past they theirs was a 787 & Y1 R&D program. Making that choice may well be a balance of making the shareholders happy and minimizing their corporate income taxes.

Break even for the 787 for Boeing will be lower because of the risk partners, just as their profit per plane will be reduced as funds go to the partners. Boeing is in a very good position in this regard.


User currently offlineLAXDESI From United States of America, joined May 2005, 5086 posts, RR: 48
Reply 24, posted (5 years 11 months 2 weeks 4 days ago) and read 17011 times:



Quoting Manni (Reply 14):
To much speculation? Perhaps. That the total cost will reach US$13 to 14 billion seems plausible.



Quoting Stitch (Reply 15):
Boeing is easily clearing nine figures profit on each model so at 900 frames that is well over $9 billion in profit. And based on the contracts I have seen and the ones I have been told about, the actual figure should be multiples of that.

Assuming an all inclusive program cost of $15 billion, and a $10 million profit per unit, the B.E.P. is 1500 units.

Assuming an all inclusive program cost of $10 billion, and a $20 million profit per unit, the B.E.P. is 500 units.

I would put my money on B.E.P. in the range of 700-900 units.


25 Asiaflyer : That calculation would have worked if the interest rate was zero, but it isn't. As NAV20 described, all future cashflows has to be discounted back to
26 Travelhound : I think you might be surprised at where the break even point is! Basic arithmetic. 5 year development at a cost of (#1) 12 billion dollars. The mean
27 LAXDESI : True. The B.E. P. is commonly used as a nominal measure. It is possible to calculate discounted cash flow B.E.P, if one had the time line with cash f
28 Danny : Boeing will have to pay agreed contract penalties no matter if they like it or not. It is not subject to their generosity. Agree with that, subject t
29 Rheinbote : The answer is totally depending on the accounting approach and rules, which vary wildly between Airbus and Boeing. Do we talk about breakeven of the p
30 Rheinwaldner : Airbus informed about break-even-number and related changes always very openly and early. If the 15 billion $ are for development you have to add the
31 Post contains links Beaucaire : Vought said they needed at least 300 frames to be delivered (and paid ) to break even http://www.charleston.net/news/2008/...g_delay_hits_vought_aircr
32 Scbriml : The "generosity" of Boeing or the airlines in neither here nor there. There will be penalty clauses for delays written in to all of the sales contrac
33 Art : IIRC the A350XWB was launched 2 years ago. Again IIRC the A350 Mk1 first came to light late 2004. It was not competitive as SUH pointed out quite blu
34 Kappel : What... USD 100,000,000? Those would be some amazing margins... I guess you meant 8 figures, that I think we can all agree on... Agreed. And Boeing c
35 Scbriml : Yes, I think a slip of the tongue! $9b / 900 = $10m per frame. I assume Stitch is including build cost and spreading development cost over the 900ish
36 Post contains images Keesje : Thnx for many good responses giving different views and new light on the 787 Break Even Point!. I think the combined A330/A350 offerings proved succes
37 Stitch : I am sure Boeing fought hard for some deals. When you're willing to order three-figures worth of planes, you're going to get a mighty good deal. But
38 Frigatebird : Maybe. But don't forget that airlines who have ordered just a few 787's (I suppose that's what you mean with "weaker launch airlines") also need to a
39 Frigatebird : I very much doubt CX or LH will order the 787, since they consider it too small. I´m pretty sure the other airlines you mention will order the 787,
40 WingedMigrator : There's a simpler way to say that: risk sharing = profit sharing
41 AirFrnt : Actually, no they really didn't. They insisted for years that the breakeven number was around 200.
42 Post contains links Keesje : http://www.freerepublic.com/focus/f-news/1722505/posts
43 Post contains links Rheinwaldner : At the time before the delays: Airbus: In 2004 they said the number would be 250: http://news.airwise.com/stories/2004/05/1085687405.html Boeing: No
44 Astuteman : Pitiful? A somewhat amusing comment in retrospect........ They'll have to pay what's in the contract, or the equivalent in other form (i.e. discounts
45 CARST : True. But there were a lot of other numbers published or leaked by / from Boeing. And with these numbers we know approximately how much they spent on
46 SSTsomeday : Yes - or to put it a different way, considering the 787's unprecedented order book prior to the first flight, there isn't the speculation regarding W
47 Post contains links Revelation : Thanks for the informative post. I'm wondering if Airbus has published any numbers for expected break even for A350XWB yet. I've done some searching
48 Revelation : I agree. The source I quote in #48 says A350XWB was costing "€11 billion, or $14.8 billion" to build, and the article is a year old.
49 Revelation : This could be true, since according to the source I quote in #48, Airbus was thought to be discounting the A350XWB heavily in the early days (first 2
50 RedFlyer : Excellent analysis. I find the stumbling by both companies to be quite interesting. I think they are a result of the fierce competition between the t
51 Kappel : I really doubt either A or B sells any aircraft at a loss, even launch orders. Granted, margins may be razor thin (especially big orders, but the sam
52 Astuteman : I seem to recall hearing a Gallois quote to the effect that Airbus were no longer going to declare break-even numbers due to the large amount of spec
53 SSTsomeday : I luck out occasionally. Sometimes I REALLY bomb... Yes on the over promising. My brother is an engineer, and he marvels at how often the suits in th
54 Revelation : I guess this thread is proof of that! Too bad for him the cat is out of the bag for the A380. Break even is largely irrelevant for 787 and A350 anyho
55 RedFlyer : I think they are simply trying to differentiate themselves by burrowing into a niche. When a market for a product or service becomes commoditzed, the
56 Asiaflyer : I don't think it is. You have to make a discounted cash flow calculation. The program runs over so many years so the interest rate component has to b
57 Art : Remember what happened when the A350 competed with the 787 for large blue chip orders from Air Canada, Qantas, Air India? It lost them all and in so
58 Keesje : I have seen graph in the past spanning an aircraft's total live cycle. As Stitch mentioned earlier Boeing is probably close to the bottom right now.
59 Rheinwaldner : My remarks were aimed at this wrong accusation against Airbus/EADS: I showed that Airbus informed all the time and Boeing hides the book behind. Any
60 Stitch : Boeing and Airbus have become victims of their own success. The 747-400 had ~142 orders before first flight. The 777-200 had ~112 orders before first
61 NAV20 : Unlikely in both cases, Keesje. With respect, I think you're confusing 'breakeven' (the point at which all costs, including accrued interest, have be
62 Keesje : Hi NAV20, thnx for the good posts (also reply 22). I was not discussing break even point in this post but cashflow. As you say Boeing and Airbus at t
63 Mptpa : It all depends on how the costs are 'allocated'. I am willing to bet that in Cost Accounting terms, a lot of the R&D are not just placed for B787, but
64 Post contains links Jet-lagged : " target=_blank>http://www.leeham.net/filelib/Scotts...8.pdf Indeed, the average of the estimates by aerospace analysis in the above report is a bit
65 Art : I go along with a second FAS as soon as the first is up and running and debugged. Boeing is doubtless working on the idea. If the second line was use
66 NAV20 : Manni, we later found out that Qantas took advantage of the engine interchangeability offered by the 787 to invite separate tenders for the engines.
67 Post contains links Manni : If these numbers are correct (50 to 60 million US$ for a set of engines) QF got royally screwed by the engine manufacturer. Here's what KE payed for
68 Baroque : That does seem a bit pricey even for such an incomparable engine. Of course we are still not entirely sure on whose behalf management would have been
69 Mptpa : Well, could that figure of 50-60 for QF include maintenance contracts for X number of years? It seems an awful lot on a per engine basis just for the
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