777ER From New Zealand, joined Dec 2003, 9848 posts, RR: 23 Posted (7 months 2 weeks 2 days 3 hours ago) and read 17854 times:
Boeing today announced that it will adjust its twin-aisle airplane production plans for 2010 due to significant deterioration in the business environment for airlines and cargo operators driven by unprecedented global economic conditions.
Monthly production of the 777 will decline from seven to five airplanes per month beginning in June 2010. Boeing will also delay previous plans to modestly increase 747-8 and 767 production. No change is being made at this time to the 737 production rate.
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No 767, 747 or 777 orders have been cancelled this year. Boeing's commercial backlog of more than 3,500 airplanes remains strong and well-diversified in terms of airplane models, geography and customer business models
Ikramerica From United States, joined May 2005, 18424 posts, RR: 60 Reply 1, posted (7 months 2 weeks 2 days 3 hours ago) and read 17841 times:
Quoting 777ER (Thread starter): No 767, 747 or 777 orders have been cancelled this year. Boeing's commercial backlog of more than 3,500 airplanes remains strong and well-diversified in terms of airplane models, geography and customer business models
I imagine that there have been deferrals though, which would impact production.
Of all the things to worry about... the Wookie has no pants.
Stitch From United States, joined Jul 2005, 15932 posts, RR: 64 Reply 2, posted (7 months 2 weeks 2 days 2 hours ago) and read 17394 times:
Well I can see the 747 and 767 lines not increasing since the bulk of their orders are freighters and demand for them is weakening in the near term.
I am surprised to hear the 777 rate cut to five, but I suppose now with fuel cheap again airlines are going to try and stretch those 747-400s for as long as they can since the fuel costs are not as bad again.
WestWing From United States, joined Feb 2005, 1547 posts, RR: 5 Reply 3, posted (7 months 2 weeks 2 days 2 hours ago) and read 17388 times:
Amazing how quickly fortunes change. It was probably only a year back that Boeing were evaluating whether it was feasible to increase the 777 production rate from seven per month to ten per month. Now they have to plan cutting down to five per month.
The best time to plant a tree is 40 years ago. The second best time is today.
797charter From Denmark, joined Jun 2005, 211 posts, RR: 0 Reply 4, posted (7 months 2 weeks 1 day 21 hours ago) and read 15836 times:
And from same source:
Meanwhile, Boeing acknowledges slower production and a price escalation for the 747, which is "currently in a loss position". Most units in the backlog will be delivered at reduced earnings levels, Boeing says.
That the LH order is sold cheap does not surprise me, - but "Most Units" is quite a lot to sell with reduced earnings.
Ikramerica From United States, joined May 2005, 18424 posts, RR: 60 Reply 5, posted (7 months 2 weeks 1 day 21 hours ago) and read 15700 times:
It sounds as if to actually deliver planes at all, they have had to drop the agreed upon price. I am sure Airbus is in the same boat, and it's probably why their A380 delivery rate continues to slow down.
Of all the things to worry about... the Wookie has no pants.
Slz396 From Belgium, joined Oct 2001, 2455 posts, RR: 20 Reply 7, posted (7 months 2 weeks 1 day 17 hours ago) and read 14030 times:
Quoting 797charter (Reply 4): Boeing acknowledges slower production and a price escalation for the 747, which is "currently in a loss position".
So far for the longstanding claim here on A.net that the 748 program must already be beyond breakeven levels as the 748F would be such a money maker to Boeing that it'd pay whetever bills the 748i sales don't pay for...
Reality is the 748F has the serious problem in that the cargo market has basically imploded, for more even than the pax market. Given the fact cargo airlines have always depended less on new built planes than the pax market, it seems the 748F is far more likely to suffer long deferrals and outright cancellations than any pax plane...
And then there's that 'little issue' of the continuous number of pretty good 747-4ERs which are coming onto the market cheaply for cargo convertion thanks to the A388 superjumbo which replaces them...
Looks like the window of opportunity for the 748F is about to close and Boeing is trying to keep it open by holding a fire sales campaign, combined with 'money back' coupons for existing customers...
Quoting Ikramerica (Reply 5): they have had to drop the agreed upon price. I am sure Airbus is in the same boat, and it's probably why their A380 delivery rate continues to slow down.
As far as I know, Airbus are struggling to increase production to the target numbers, which under normal conditions would mean another round of penalty payments, yet they have the convenience of the economic downturn allowing them to accomodate requests for deferrals without charging (too much) for this from the customers... Wouldn't be surprised to learn EADS is making some extra cash from of lower than planned production increase.
As to the 748i, that deal with LH was a serious gamble from Boeing in order to kick start the pax version, yet clearly it didn't pay off and they are now stuck with a serious financial liability on their books because of it. LH and B are probably watching eachother very closely to see who blinks first.... I think LH will walk away with a very good deal here, regardless the outcome: either they'll get 20 x 748i for less then they cost to make, or they'll get to pick something from the Boeing store at greatly discounted prices, after which they'll just order more A380s then...
Azhobo From United States, joined Jun 2007, 343 posts, RR: 0 Reply 9, posted (7 months 2 weeks 1 day 14 hours ago) and read 12419 times:
Boeing sets firm prices for a plane about a year before it is delivered, decided by a formula tied to certain economic indices. The recent poor performance of the world's economy means that prices being set now are well below where Boeing expected them to be.
PlaneHunter From Germany, joined Mar 2006, 3151 posts, RR: 71 Reply 10, posted (7 months 2 weeks 1 day 14 hours ago) and read 12214 times:
Quoting Slz396 (Reply 7): And then there's that 'little issue' of the continuous number of pretty good 747-4ERs which are coming onto the market cheaply for cargo convertion thanks to the A388 superjumbo which replaces them...
There are only six 747-400ERs in service and it's not very likely QF will retire them anytime soon.
Apart from that, it's likely that many of the old 747-400s to be replaced by A380s will go directly to the scrapyard.
Quoting Slz396 (Reply 7): Wouldn't be surprised to learn EADS is making some extra cash from of lower than planned production increase.
It also wouldn't be a surprise to see cancellations for numerous widebodies.
OyKIE From Norway, joined Jan 2006, 1679 posts, RR: 4 Reply 11, posted (7 months 2 weeks 1 day 14 hours ago) and read 12193 times:
Quoting Slz396 (Reply 7): As far as I know, Airbus are struggling to increase production to the target numbers, which under normal conditions would mean another round of penalty payments, yet they have the convenience of the economic downturn allowing them to accomodate requests for deferrals without charging (too much) for this from the customers... Wouldn't be surprised to learn EADS is making some extra cash from of lower than planned production increase.
There are serious flaws in your logic, and some statements are not true. So I hope that you are joking….? The problem for Airbus is that they might end up producing 3 more A380 airplanes, than will be delivered this year. This is a serious headache for A380. Even if the planned production increase is not as high as they first set as a goal Airbus is worried that they have 3 A380's without a home at the end of the year. The production slowdown at both Boeing and Airbus are necessary, but not good news for any of them.
What is interesting is that Airbus cancelled the planned production increase immediately, and plans on cutting narrowbody production. Boeing is sticking to their planned production rate for the rest of 2009 and halfway out in 2010. And then they will only cut in the widebody production. I wonder why they read the marked so differently? I know that with the 787 production coming online next year they will end up producing more widebodies than Airbus even if they cut the 777 production. But why does Boeing choose to stick to the current 737 production rate, whereas Airbus is decreasing the production on the A320? Both have a healthy backlog. It will be interesting to see what pays off in a year or two.
Dream no small dream; it lacks magic. Dream large, then go make that dream real - Donald Douglas
Slz396 From Belgium, joined Oct 2001, 2455 posts, RR: 20 Reply 12, posted (7 months 2 weeks 1 day 13 hours ago) and read 11613 times:
Quoting Clickhappy (Reply 8): Airbus - production cuts are good. Infact, EADS is going to profit from cutting production.
Did I say that? I suggest you read again....
Quoting Clickhappy (Reply 8):
Boeing - production cuts are bad, They can't even give away their products at "fire sales" prices, the 747-8 is doomed.
Now I must admit that is a very good translation of what Boeing is saying in:
Quoting 797charter (Reply 4): the 747 is currently in a loss position and most units in the backlog will be delivered at reduced earnings levels.
Quoting OyKIE (Reply 11): There are serious flaws in your logic and some statements are not true.
The only logic which has been shown to have flawns and the only statement which has been proved to be wrong is the longstanding claim here on A.net that the 748 program must surely be far beyond breakeven levels already as the 748F is such a money maker to Boeing that it'd pay whetever bills the 748i sales don't pay for.
LipeGIG From Brazil, joined May 2005, 7855 posts, RR: 63 Reply 13, posted (7 months 2 weeks 1 day 13 hours ago) and read 11451 times:
AIRLINERS.NET CREW FORUM MODERATOR
Quoting WestWing (Reply 3): Amazing how quickly fortunes change. It was probably only a year back that Boeing were evaluating whether it was feasible to increase the 777 production rate from seven per month to ten per month. Now they have to plan cutting down to five per month.
The bad side is that will take another year or more if they decide to increase production, even back to 7 per month.
Baroque From Australia, joined Apr 2006, 10617 posts, RR: 51 Reply 14, posted (7 months 2 weeks 1 day 13 hours ago) and read 11182 times:
Quoting Stitch (Reply 2): 777 rate cut to five, but I suppose now with fuel cheap again airlines are going to try and stretch those 747-400s for as long as they can since the fuel costs are not as bad again.
If it is based on fuel prices, there must be at least a 50% chance that by the time the changes take effect, fuel is no longer cheap.
The two things that happened first were a decrease in consumption and an unwinding of paper positions on oil accelerating the decrease in price leading to the next thing which has been a slowing of investment in oil production. Once consumption starts to rise, forget low prices. How long do you fancy the recession lasting. Some are talking about China starting to emerge from it, and there is much fascination with fishhook statistics. If they are right !!!!!!!
Stitch From United States, joined Jul 2005, 15932 posts, RR: 64 Reply 15, posted (7 months 2 weeks 1 day 10 hours ago) and read 9289 times:
Quoting 797charter (Reply 4): That the LH order is sold cheap does not surprise me, - but "Most Units" is quite a lot to sell with reduced earnings.
Quoting Ikramerica (Reply 5): It sounds as if to actually deliver planes at all, they have had to drop the agreed upon price.
Rather then Boeing selling 747-8s at minimal margins, it is possible the large development and production cost increases are having a deleterious effect on the original margin calculations.
With 106 orders, every $100 million rise in costs knocks a million off the profit margin. And Boeing has announced hundreds and hundreds of millions in additional development costs alone, so I would not be surprised to see profits dropping upwards of $10 million per unit at the extreme end of the scale, which is going to hurt.
Quoting Slz396 (Reply 7): And then there's that 'little issue' of the continuous number of pretty good 747-4ERs which are coming onto the market cheaply for cargo conversion thanks to the A388 superjumbo which replaces them...
As noted, there are only six 747-400ERs in revenue service and they are not going anywhere. As to 747-400 conversions, with Boeing scaling back 777 deliveries that is a good sign that with fuel cheaper, airlines are going to hold on to their 747-400 passenger fleets longer then planned before replacing them with 777-300ERs which means they will not be available for conversion as planned. Also, some cargo operators are retiring older dedicated and converted 747-400 freighters for new build models now and it is not beyond the realm of possibility they will do continue to do so going forward which will mean continued 747-8F deliveries at the current base level.
Astuteman From United Kingdom (England), joined Jan 2005, 6193 posts, RR: 85 Reply 16, posted (7 months 2 weeks 1 day 10 hours ago) and read 9006 times:
Quoting Clickhappy (Reply 8): Boeing - production cuts are bad, They can't even give away their products at "fire sales" prices, the 747-8 is dommed.
Airbus - production cuts are good. Infact, EADS is going to profit from cutting production.
Did I get that right?
Maybe EADS can take all that profit from a declining A380 line and use it to prop up the A400M project, which is now over 5 years late
Indeed. It cuts completely against the grain to see this argument, when it is almost universally presented on here pointing in the opposite direction......
Doesn't make either version any more right.
But I'll do you a deal.
You carry on picking this one out, and I'll trawl the reverse ones out of the system.
Quoting OyKIE (Reply 11): The problem for Airbus is that they might end up producing 3 more A380 airplanes, than will be delivered this year. This is a serious headache for A380.
For goodness sake.
Quoting Stitch (Reply 15): Rather then Boeing selling 747-8s at minimal margins, it is possible the large development and production cost increases are having a deleterious effect on the original margin calculations.
SunriseValley From Canada, joined Jul 2004, 2241 posts, RR: 1 Reply 17, posted (7 months 2 weeks 1 day 10 hours ago) and read 8975 times:
Quoting OyKIE (Reply 11): What is interesting is that Airbus cancelled the planned production increase immediately, and plans on cutting narrowbody production. Boeing is sticking to their planned production rate for the rest of 2009 and halfway out in 2010. And then they will only cut in the widebody production. I wonder why they read the marked so differently?
I would suggest that the "quality" of the Boeing narrow body orders is probably better than those of Airbus. An analysis of these orders using probability analysis would be a useful exercise for someone with the necessary skills and the inclination to do so.
Astuteman From United Kingdom (England), joined Jan 2005, 6193 posts, RR: 85 Reply 18, posted (7 months 2 weeks 1 day 10 hours ago) and read 8796 times:
Quoting SunriseValley (Reply 17): I would suggest that the "quality" of the Boeing narrow body orders is probably better than those of Airbus. An analysis of these orders using probability analysis would be a useful exercise for someone with the necessary skills and the inclination to do so.
The fact that Airbus's narrowbody production rate was planned to be approaching 25% higher than Boeing's might have a little bit to do with it, too....
Khobar From United States, joined Mar 2006, 2346 posts, RR: 3 Reply 19, posted (7 months 2 weeks 1 day 9 hours ago) and read 8423 times:
Quoting Slz396 (Reply 7): So far for the longstanding claim here on A.net that the 748 program must already be beyond breakeven levels as the 748F would be such a money maker to Boeing that it'd pay whetever bills the 748i sales don't pay for...
Boeing has invested how much in the 748 program? $Billions.
Boeing has delivered how many 748's? Zero.
Unless airlines pay fully up front, of course the program is "CURRENTLY" in a loss possition.
Stitch From United States, joined Jul 2005, 15932 posts, RR: 64 Reply 20, posted (7 months 2 weeks 1 day 9 hours ago) and read 8399 times:
While a common (and somewhat tired, IMO) argument, considering the depth and breadth of the downturn across all areas of the world, I don't really see "quality of customer" being a major determiner about near-term deliveries. Even some of the largest and most established carriers are taking baths in certain markets while smaller, newer carriers are leveraging their lower costs to expand market share while conditions favor them doing so.
Well, that's what it sounded like, but it doesn't sound right...
Quoting Stitch (Reply 15): Rather then Boeing selling 747-8s at minimal margins, it is possible the large development and production cost increases are having a deleterious effect on the original margin calculations.
Okay, I'm getting this information from a different link. I had just read that before posting in this thread, and didn't realize that the information about pricing was not in the above link.
But, despite what some people on this forum think, prices are NOT set in stone on order and this economic environment has meant that Airbus and Boeing are delivering their 747s and A380s at lower prices than ever imagined, because prices are "firm" but pegged on market indices that have fallen.
This is how the "above water" 748F has gone below water in the books, but because it doesn't EIS until next year, if there is a recovery by YE2010, the 748F could go back above water without Boeing doing much at all.
Stitch From United States, joined Jul 2005, 15932 posts, RR: 64 Reply 22, posted (7 months 2 weeks 1 day 9 hours ago) and read 8290 times:
Quoting Ikramerica (Reply 21): But, despite what some people on this forum think, prices are NOT set in stone on order and this economic environment has meant that Airbus and Boeing are delivering their 747s and A380s at lower prices than ever imagined, because prices are "firm" but pegged on market indices that have fallen.
It would be rather perversely ironic should the huge order run-ups Boeing and Airbus scored the past few years come back to haunt them as all those 737s/777/787s and A320s/A330s/A380s could end up being delivered at prices well below plan if this economic malaise really does push deep into 2010 or even 2011.
Scipio From Belgium, joined Oct 2007, 430 posts, RR: 0 Reply 23, posted (7 months 2 weeks 1 day 9 hours ago) and read 8253 times:
Quoting Azhobo (Reply 9): Boeing sets firm prices for a plane about a year before it is delivered, decided by a formula tied to certain economic indices. The recent poor performance of the world's economy means that prices being set now are well below where Boeing expected them to be.
Interesting. I always wondered how Boeing, Airbus and the airlines could appropriately agree on prices for contracted deliveries 5-10 year in the future. A well-designed pricing formula could, in theory at least, achieve an acceptable degree of risk sharing between manufacturer and airline.
Well, I do doubt they would be so stupid to allow for delivery prices WELL below plan, but for programs like the 748 and A380 which are fighting to go positive, the lower prices combined with delays and concessions that may be necessary to prevent very expensive white tails would keep them negative.
Of all the things to worry about... the Wookie has no pants.
I fear drastic rationalisation, 747-8i and 767 out, innitiation of HGW 787 versions and a 737 replacement in a few years (the 777-200 /ER/LR backlock is dropping fast (40 last dec?) & the original 787-10 seems unpopular).
Lets hope 737 demand keeps strong for the next few yrs and the backlog remains intact.
The 777-300ER seems to have good prospects whatever happens..
photo : flightglobal
Maybe a low risk 777-400 medium/long range version (Steven UH asked for it) could better break into the 747-400 replacement market then the 747-8i. LH as a launch customer?
[Edited 2009-04-10 10:59:48]
26 Stitch: Airbus have a "Price Revision Formula" which they use to revise the price as necessary between the signing of the Purchase Agreement and actual delive
27 Rheinbote: http://seattletimes.nwsource.com/htm...space/2009017116_boeingcuts10.html "The production cut's effect on Everett employment may be offset somewhat wh
28 Stitch: Well a slower ramp would help Boeing deliver planes on schedule (less pressure to rush) and reduce compensation payments (as customers defer of their
29 OyKIE: Sorry for my typing errors lately Keyboard dyslexia perhaps? That might have something to do with it. And of course the fact that Airbus was aiming f
30 FRNT787: I have seen that argument made. But, imo, both manufacturers have narrowbody orders in the future that could go either way (i.e. delivered or cancell
31 Rheinbote: I don't get your logic. How can a slower ramp help to deliver on schedule if you are 2 years behind already? How can a slower ramp help to reduce pen
32 Manfredj: I'm very confused by all this...is there sarcasm or are you both in agreement that the program is doomed and hemorraging money? How does this bode fo
33 Keesje: The Boeing 747-8F is indeed wihout competition from Airbus and likely a good freighter too. However usefull 747-400 are entering the conversion marke
34 FrmrCAPCADET: I would suspect that there are price adjustments tied to the cost of aluminum, titanium, graphite fiber, plasticiser, leather etc at about the time th
35 AirNz: Could you explain further what you mean by quality?
36 Astuteman: If you're a betting man, I'd put my money on the sarcasm... It's astonishing to me just how often we see arguments which insist that the very same se
37 MotorHussy: Given the massive delays with the 787 (including the 9-series) and the renewed interest in the 767, particularly with Boeing offering them as a sacrif
38 OyKIE: If the cargo market will get worse then who knows. Even if IATA believes in a small recovery next year they have lowered their forecast for the rest
39 OyKIE: According to IATA Chief Economist Brian Pearce he http://www.atwonline.com/news/story.html?storyID=16090 This suggest that Boeing and Airbus current p
40 Stitch: No. All the recent top-up orders for the passenger 767s have been 767-300ERs,
41 Parapente: The "will they won't they" discussion on the production decision on the 748i has been and continues to be an interesting one.I believe that if Boeing
42 Stitch: While I know at least one person will not believe LH will take delivery of the 747-8I even after 20 to 40 of them are in daily revenue service with t
43 LipeGIG: The 764 is so closer to the 772 in terms of passenger capacity, and the 772 is more efficient (even more in range). This was a main reason that limit
44 Stitch: Yup, it's pretty much a niche airplane. It's biggest advantage is it is lighter then a 777-200 (by around 32t) so it will fly a bit over 10% farther,
45 Azhobo: Sorrry i got that from an article, and forgot to credit and post a link. I found it interesting too, that is why i posted it.
46 2175301: Of course they will build the 748i - and I believe that Boeing will continue to offer it for the forseeable future. I believe that the 748i is a stra
47 Ikramerica: And when customers just can't decide between the two, Boeing then says: "you know, we also have this 77W which most customers are using to replace 74
48 Stitch: I am inclined to think you may have hit on an interesting point there, Ikramerica. Before the 777-300ER, Airbus had a nice little bracket on the 747-
49 Parapente: "That's all air over the wing" Quite right. It really is a wait and see situation. The cards have ben played -for better or for worse. In truth - righ
50 Baroque: Does that mean the same as placing a forward short leg and then bowling a full length outswinger on off stump? Whatever has happened to passenger dem
51 Cerecl: I am having a hard time imagining many airlines would be "confused" by having two VLA to be selected. What you are suggesting is that airlines that w
52 Slz396: So you've moved away from the very vocal 'it is already completely paid for' camp to the 'it needn't make any money since its part of a much wider st
53 Stitch: True, but it's a short-term phenomena. Which is why I am by statements made by some implying that Asian exports to North America and the European Uni
54 Baroque: I too doubt they will be THIS down for long. The question is to what extent they recover and how quickly they do. One way and another, it seems likel
55 2175301: I don't know where you got this from: I was never a believer of "Its already paid for" and cannot immagine myself making that kind of argument. I run
56 Astuteman: A statement which is, of course, largely nonsense.. And there is no way that it is early enough to say that the "foresight" of launching the A380 was
57 Tdscanuck: Although Boeing does have a pretty good record of reading the market on overall programs (some derivatives seem to have flopped), it's being extremel
58 Stitch: Likely so, but keeping shipping costs low is important so I believe there will be a call for new planes with lower operating costs. Yes, you save a g
59 Hotelmode: Interesting thread. Stitch in particular From my airlines point of view (as the largest long haul pax 744 operator) the 748i is dead in the water. To
60 JoeCanuck: Some things work, some things don't. For aircraft, there is such a long lead time from concept to marketplace that any number of things can happen to
61 Baroque: Added to which the critical snag of trying to use CATIA4 and CATIA5 together in series/parallel (delete as appropriate) while it might not be thought
62 Swallow: Yep. The same as a no. 11 batsman at the crease with 10 runs required off 2 balls. Glenn McGrath bowling his last over with 3 slips and two gullies w
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