Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
F-blogger: The Price Of Boeing's 787 Sales Success  
User currently offlineEBGARN From Sweden, joined Jan 2008, 226 posts, RR: 0
Posted (3 years 11 months 1 week 3 days 3 hours ago) and read 25392 times:

The article I've eagerly been waiting for is here:

http://www.flightglobal.com/blogs/fl...he-price-of-boeings-787-sales.html

I have just started reading it, I guess you'd like to too.

"Inside:
- How the 787 backlog was built
- Predicable costs at 787's foundation
- Scott Carson's ascent
- Can the 787-9 undo the damage?
- Looking at 17 787's per month
- The revival of the 787-10
- Redrawing the supply chain lines"

And

"Data obtained by FlightBlogger show Boeing's historic order backlog for the 787 was based partly on steep discounts driven by now-discarded design and manufacturing assumptions. Cost overruns, penalty payments and supply chain changes adopted in the last two years will force Boeing to achieve unprecedented cost-savings for the widebody to turn a profit even after delivering the current 846-aircraft backlog."


A306,A319/20/21,A332/3,A343/6,A380,B717,B727,B737,B744,B752/3,B763,B772/3/W,C-130,AN26,CRJ900,Il62,DC-8/9/10,MD80's,BaeR
173 replies: All unread, showing first 25:
 
User currently offlineZKCIF From Lithuania, joined Oct 2010, 330 posts, RR: 0
Reply 1, posted (3 years 11 months 1 week 3 days 3 hours ago) and read 25338 times:

Quoting EBGARN (Thread starter):
will force Boeing to achieve unprecedented cost-savings for the widebody to turn a profit even after delivering the current 846-aircraft backlog."

Is it THAT bad??


User currently offline14ccKemiskt From Sweden, joined Nov 2010, 72 posts, RR: 0
Reply 2, posted (3 years 11 months 1 week 3 days 2 hours ago) and read 25073 times:

Quoting ZKCIF (Reply 1):
Is it THAT bad??

Well, do the math. With the development cost of $ 18 Billion shared upon 846 frames, each plane would have to make a profit of >$21 million each. Not possible, not even remotely.

//14cc


User currently offlineJBirdAV8r From United States of America, joined Jun 2001, 4491 posts, RR: 21
Reply 3, posted (3 years 11 months 1 week 3 days 2 hours ago) and read 24981 times:

Quoting 14ccKemiskt (Reply 2):
With the development cost of $ 18 Billion

Where in the world did you come up with that figure? Not in that article.

TOTAL development costs were considered to be in the $15B or so range, but that doesn't represent Boeing's share. And a notable chunk of those costs were already sunk into Sonic Cruiser R&D years ago. So that's overly simplistic and incorrect.



I got my head checked--by a jumbo jet
User currently offlineRabenschlag From Germany, joined Oct 2000, 1018 posts, RR: 0
Reply 4, posted (3 years 11 months 1 week 3 days 2 hours ago) and read 24930 times:

Quoting JBirdAV8r (Reply 3):
Where in the world did you come up with that figure? Not in that article.

TOTAL development costs were considered to be in the $15B or so range, but that doesn't represent Boeing's share. And a notable chunk of those costs were already sunk into Sonic Cruiser R&D years ago. So that's overly simplistic and incorrect.

this is the source, not the most biased one perhaps:

http://seattletimes.nwsource.com/htm...ology/2013713745_dreamliner19.html


User currently offlineTinosky From Canada, joined Mar 2010, 103 posts, RR: 0
Reply 5, posted (3 years 11 months 1 week 3 days 2 hours ago) and read 24901 times:

Time to get to toolbelts fastened,

I was in HND a couple weeks ago, ANA is sure getting anxious.

Tinosky~


User currently offlineJBirdAV8r From United States of America, joined Jun 2001, 4491 posts, RR: 21
Reply 6, posted (3 years 11 months 1 week 3 days 2 hours ago) and read 24849 times:

Quoting Rabenschlag (Reply 4):
this is the source, not the most biased one perhaps:

http://seattletimes.nwsource.com/htm....html

That's new to me...thanks for posting that. Those figures still seem high to me, but it's definitely not outside the realm of possibility considering Global Aeronautica, the CHS line, etc.



I got my head checked--by a jumbo jet
User currently offlineWarpSpeed From United States of America, joined Feb 2010, 595 posts, RR: 3
Reply 7, posted (3 years 11 months 1 week 3 days 2 hours ago) and read 24806 times:

Quoting 14ccKemiskt (Reply 2):
Not possible, not even remotely.

Well, there will be additional frames sold to help amortize to development costs. For example, the 787-10 is apparently back in the mix. And, building planes is dynamic, not static. Boeing will find a way to bring production costs back down. Unprecedented cost-savings? As they say, necessity is the mother of invention. Maybe we will see some new production technologies from all this. There's also the possibility that Boeing could emerge stronger from this debacle - much like Airbus has used the A380 debacle as a springboard for a smoother ride (TBD) on the A350XWB.



DaHjaj jaj QaQ Daghajjaj !!!!
User currently offlineDocLightning From United States of America, joined Nov 2005, 20222 posts, RR: 59
Reply 8, posted (3 years 11 months 1 week 3 days 2 hours ago) and read 24752 times:

Quoting ZKCIF (Reply 1):

Is it THAT bad??
Quoting 14ccKemiskt (Reply 2):

Well, do the math.

OK, I'm going to have an "I told you so" moment.

I predicted the delay in FF closer than anyone else on the board. I predicted the further delay in EIS when people were saying it was all gonna be fine. And I most certainly have publicly raised doubts since about 2008 about the 787 program's profitability. Somewhere once I heard that A/B make a ~10% profit margin on the average aircraft sale. I've heard smaller numbers but never larger. So I figured that, a good year-and-a-half into the delays that there was no way this could make a profit because it was obvious that cost overruns were going to be *way* over 10%. Building a second assembly line alone was a big hint.

Do you know the secret to my success? It's simple: Everything about the 787 program management is a complete disaster. They embody Murphy's Law. If it could possibly be bad news, it is. Rabenschlag's article highlights this nicely.

If the FAA won't grant them ETOPS certification at launch (which is the current threat), they might as well cancel the program and cut their losses.


User currently offlineRedChili From Norway, joined Jul 2005, 2302 posts, RR: 5
Reply 9, posted (3 years 11 months 1 week 3 days 1 hour ago) and read 24734 times:

From the article:

Quote:

The 2004 through 2006 airframe prices charged to airline customers ranged between $83.5 million and as low as $65.7 million for the 787-8, for one higher volume deal with a blue chip customer.

I assume he's talking about a certain Kangaroo carrier. That purchase price, which is less than the list price of a 73G today, certainly explains why they ordered them by the multiple dozens.



Top 10 airplanes: B737, T154, B747, IL96, T134, IL62, A320, MD80, B757, DC10
User currently offlinewolbo From Netherlands, joined Mar 2007, 493 posts, RR: 1
Reply 10, posted (3 years 11 months 1 week 3 days 1 hour ago) and read 24683 times:

Looks like Boeing decided on a strategy of buying market share with the launch of the 787.

Quote:
Data obtained by FlightBlogger show Boeing's historic order backlog for the 787 was based partly on steep discounts driven by now-discarded design and manufacturing assumptions.
Quote:
The 2004 through 2006 airframe prices charged to airline customers ranged between $83.5 million and as low as $65.7 million for the 787-8, for one higher volume deal with a blue chip customer.

That's a shocking low price tag. Combined with the data on the cost overruns of $12 billion to $18 billion it all but guarantees that Boeing will make a loss on the entire 850 aircraft orderbook.

They're bleeding money on the 787 and this must surely affect their ability to launch future programs.

What an absolute shambles.

[Edited 2010-12-21 15:11:10]

User currently offline14ccKemiskt From Sweden, joined Nov 2010, 72 posts, RR: 0
Reply 11, posted (3 years 11 months 1 week 3 days 1 hour ago) and read 24647 times:

Quoting JBirdAV8r (Reply 3):
Where in the world did you come up with that figure? Not in that article.

TOTAL development costs were considered to be in the $15B or so range, but that doesn't represent Boeing's share. And a notable chunk of those costs were already sunk into Sonic Cruiser R&D years ago. So that's overly simplistic and incorrect.

The original estimated development cost was clamied (by the Seattle Times) to be around $5 billion. It's perfectly fair to assume that that figure is shared among Boeing and it's contractors, I agree with you on that point.

But for the rest, I'm not so sure. Delay penalties to the airlines should be a Boeing expense. Aquiring failing subcontractors likewise. The cost for reworking non-finished planes after leaving FA should also be a Boeing concern as should writing off the six unsellable test planes. If Boeing were to penalise their contractors too much, the contractors would either: go under (and thereby definitely become a Boeing expense) or withdraw from the contract a.s.a.p (with the same result).

For the Sonic Cruiser, I doubt that very much money were actually spent on that project. It seemed to me to more of a market and technical analasys than an actual development project.

Let's for the sake of it write down Boeing developing costs to $12 billion in total. That's over $14 million per plane so far ordered. Still not possible.

Quoting WarpSpeed (Reply 7):
Well, there will be additional frames sold to help amortize to development costs. For example, the 787-10 is apparently back in the mix.

I'm not suggesting that the plane won't be profitable eventually. But the first 846 frames will definately not be.

//14cc


User currently offlineEPA001 From Netherlands, joined Sep 2006, 4861 posts, RR: 40
Reply 12, posted (3 years 11 months 1 week 3 days 1 hour ago) and read 24597 times:
Support Airliners.net - become a First Class Member!

Quoting DocLightning (Reply 8):
Do you know the secret to my success? It's simple: Everything about the 787 program management is a complete disaster. They embody Murphy's Law. If it could possibly be bad news, it is. Rabenschlag's article highlights this nicely.


Yes, that article combined with this one puts serious doubts on when and if the B787 is ever going to be profitable. The interest costs alone, combined with (loss making) cash flow which will only start if the first couple of hundreds B787 are being delivered, combined with all the penalties and other massive cost overruns are a very serious financial burden for Boeing. Too bad that they scr***d things up so badly on this initially very promising airliner. The shift to the B787-9 might cut some of these losses, but many airlines will not pay the full amount for that version as well, especially if they got these super-deals on the B787-8.

Quoting DocLightning (Reply 8):
If the FAA won't grant them ETOPS certification at launch (which is the current threat), they might as well cancel the program and cut their losses.


That delayed ETOPS certification would be another serious blow since that will mean many customers can not operate the B787 as they envisioned or might not even allow them to start operations with the plane completely. Think about the Australian and New Zealand customers for a start.

Cancelling the program would however cost even more imho, so they will not go there unless the still to be announced next delay is that bad that customers really go for other options (A330's and B777's). A350's are not an options to these customers since that plane has also accumulated lots of orders and is also practically sold out until way after 2015.  . All in all a sad and troublesome situation the B787 program finds itself into at this time.  .


User currently offline14ccKemiskt From Sweden, joined Nov 2010, 72 posts, RR: 0
Reply 13, posted (3 years 11 months 1 week 3 days 1 hour ago) and read 24529 times:

Quoting DocLightning (Reply 8):
If the FAA won't grant them ETOPS certification at launch (which is the current threat), they might as well cancel the program and cut their losses.

They wouldn't. They would "just" add more time to the test program until they were certified. (Or, maybe, maybe, deliver a few frames to customers who doesn't need ETOPS anyway.)

//14cc


User currently offlineEPA001 From Netherlands, joined Sep 2006, 4861 posts, RR: 40
Reply 14, posted (3 years 11 months 1 week 3 days 1 hour ago) and read 24477 times:
Support Airliners.net - become a First Class Member!

Quoting WarpSpeed (Reply 7):
For example, the 787-10 is apparently back in the mix.


Far from it I would say. That B787-10, which is now a totally different B787-10 then earlier envisioned and discussed here intensively at A-net, might be introduced into the program as a high-capacity, not so long range variant. That seems like a wise idea, but it is an idea only, nothing more at this point in time.

And if it is introduced (with an EIS of 2016 at the earliest in my opinion) it will not stop Airbus scoring many more orders with the A330-series. In the other article Boeing themselves expect Airbus to squeeze out even a couple of 100 NM's more range out of the A330's on top of the increases and improvements just announced recently by Airbus. A phenomenal achievement. Who would have thought that the initially relatively slow selling A330 would evolve into such a terrific performer as it is today (and it will be even better in the near future) making the life of a totally newly designed plane, more then 15 years later, very, very hard indeed.  .

Several posters here who submitted calculations that the A330 would still hold part of it's ground, even after the B787-8 would hit the market, were frequently laughed at. Now it seems that their calculations were more then right, and still even conservative. So even after the B787 will finally hit the market as an operational airliner, the A330 is there to stay for quite a while.  . And will make the financial life of the B787 quite hard well into the late 2010's.

[Edited 2010-12-21 15:29:27]

User currently offlineLAXDESI From United States of America, joined May 2005, 5086 posts, RR: 47
Reply 15, posted (3 years 11 months 1 week 3 days 1 hour ago) and read 24260 times:

From the link in OP:
The price today, again boosted on December 14, places the 787-8 average catalogue pricetag at $185.2 million, more than 40% higher than first envisaged. That increase is compared to an average 19-22% jump in the price of the 777 and 767 over the same period, respectively.

Additionally, the price of the 787-9 first appeared in May 2006 when Boeing displayed a $178.5 to $188 million and has risen today to average of $219.1 million.

Comment:
The A332 has a list price of $191 million, and the A333 has a list price of $212 million. Looks like the current A332 will remain competitive against the B788 based on price, availability, and performance for medium haul routes. I have my doubts about Airbus wanting to reengine A332 anytime soon. They are better off spending the limited resources on A350 and A320NEO program.


User currently offlineflood From United States of America, joined Feb 2009, 1381 posts, RR: 1
Reply 16, posted (3 years 11 months 1 week 3 days ago) and read 24221 times:

Quoting wolbo (Reply 10):
That's a shocking low price tag.

Begs the question how much the airlines received in delay compensation on top of it.

Quoting WarpSpeed (Reply 7):
WarpSpeed

I commend you for managing to scrape together some optimism at this point  


User currently offlinedynamicsguy From Australia, joined Jul 2008, 883 posts, RR: 9
Reply 17, posted (3 years 11 months 1 week 3 days ago) and read 24146 times:

Quoting 14ccKemiskt (Reply 11):
The original estimated development cost was clamied (by the Seattle Times) to be around $5 billion. It's perfectly fair to assume that that figure is shared among Boeing and it's contractors,

The Seattle Times article states that this is for "its [Boeing's] own costs", so it is fair to assume that this was only Boeing's share of it. $5b spread across all partners is way way too low, even for the most optimistic estimate at the start of the program.


User currently offlineDocLightning From United States of America, joined Nov 2005, 20222 posts, RR: 59
Reply 18, posted (3 years 11 months 1 week 2 days 23 hours ago) and read 23898 times:

Quoting WarpSpeed (Reply 7):
There's also the possibility that Boeing could emerge stronger from this debacle - much like Airbus has used the A380 debacle as a springboard for a smoother ride (TBD) on the A350XWB.

The problem is that Boeing doesn't have the resources available to get started on that next project. Nobody's even sure what it is. They've said no 737RS, so maybe the 737NG and 777NG, but those aren't like the A350.


User currently offlineikramerica From United States of America, joined May 2005, 21562 posts, RR: 59
Reply 19, posted (3 years 11 months 1 week 2 days 23 hours ago) and read 23868 times:

Quoting EBGARN (Thread starter):
"Data obtained by FlightBlogger show Boeing's historic order backlog for the 787 was based partly on steep discounts driven by now-discarded design and manufacturing assumptions. Cost overruns, penalty payments and supply chain changes adopted in the last two years will force Boeing to achieve unprecedented cost-savings for the widebody to turn a profit even after delivering the current 846-aircraft backlog."

I thought we had come to the conclusion years ago that Boeing wouldn't really be turning a profit before the first 1000 were delivered because of the steep discounts. I guess we were wrong, because now, after all the ADDITIONAL costs, Boeing is looking at break even near 1000.

The family is still likely to sell 2000. And it will be profitable. But not the cash cow it could have been.



Of all the things to worry about... the Wookie has no pants.
User currently offlineWingedMigrator From United States of America, joined Oct 2005, 2243 posts, RR: 56
Reply 20, posted (3 years 11 months 1 week 2 days 22 hours ago) and read 23442 times:

Quoting JBirdAV8r (Reply 3):
TOTAL development costs were considered to be in the $15B or so range, but that doesn't represent Boeing's share.

Nor does $15B divided by 846 frames mean that Boeing needs to recover $18M of profit per frame. The profit (if any) is shared among Boeing and its subcontractors, and Boeing only sees a fraction of it. Neither way of doing the math looks good for anybody involved.

Quoting ikramerica (Reply 19):
The family is still likely to sell 2000. And it will be profitable.

   Eventually.


User currently offlinestitch From United States of America, joined Jul 2005, 31243 posts, RR: 85
Reply 21, posted (3 years 11 months 1 week 2 days 21 hours ago) and read 23333 times:
Support Airliners.net - become a First Class Member!

Quoting RedChili (Reply 9):
The 2004 through 2006 airframe prices charged to airline customers ranged between $83.5 million and as low as $65.7 million for the 787-8, for one higher volume deal with a blue chip customer.
Quoting wolbo (Reply 10):
That's a shocking low price tag.

Boeing has always priced the 787-8 near that of the 767-400ER. In 2004, the average price for a 787-8 was $120 million, rising to $146 million in 2005 and $153 million in 2006. So with standard discounts of around 50%, those prices are in line. You also need to figure the ancillary sales a large order like QF's or NH's brought in and those are all very high margin and can add many, many millions to each frame's price.

The article also noted that price does not include engines or customer-supplied equipment. So add tens of millions more to that price for them and the actual "contract price" is probably north of $100 million per frame.

[Edited 2010-12-21 19:16:34]

User currently offlineStickShaker From Australia, joined Sep 2004, 758 posts, RR: 5
Reply 22, posted (3 years 11 months 1 week 2 days 20 hours ago) and read 22828 times:

Quoting RedChili (Reply 9):
From the article:

Quote:

The 2004 through 2006 airframe prices charged to airline customers ranged between $83.5 million and as low as $65.7 million for the 787-8, for one higher volume deal with a blue chip customer.

I assume he's talking about a certain Kangaroo carrier. That purchase price, which is less than the list price of a 73G today, certainly explains why they ordered them by the multiple dozens.
Quoting stitch (Reply 21):
The article also noted that price does not include engines or customer-supplied equipment. So add tens of millions more to that price for them and the actual "contract price" is probably north of $100 million per frame.

Even so it must represent the deal of the century for QF. QF screwed both A and B very hard on that one - they even sent them back to reconsider pricing after they presented their final offer. After loosing the QF deal Airbus decided they needed to build the 350XWB (also partly influenced by poor 346 sales).

QF still have another 50 unexercised options (purchase rights ?) - I wonder if they are also at the same rock bottom price.

Regards,
StickShaker


User currently onlineAsiaflyer From Singapore, joined May 2007, 1147 posts, RR: 0
Reply 23, posted (3 years 11 months 1 week 2 days 19 hours ago) and read 22536 times:

Quoting stitch (Reply 21):
Boeing has always priced the 787-8 near that of the 767-400ER.


Which must be one of Boeings major mistakes.
A spanking new plane with a lot of edge cutting technology, being priced like the stretch of a matured model does not sound like normal business practice.
It makes me wonder what scenarios Boeing was calculating with as worst case outcome, and what the recovery plans for those scenarios looked like?

The very steep 787 discounts mentioned might ultimately have driven Airbus to develop the A350XWB, which now appears as a much stronger competitor to the 787 than the original A350 was.
Boeings "steep discount to win order" strategy may accordingly give Boeing double punches in their face.



SQ,MI,MH,CX,KA,CA,CZ,MU,KE,OZ,QF,NZ,FD,JQ,3K,5J,IT,AI,IC,QR,SK,LF,KL,AF,LH,LX,OS,SR,BA,SN,FR,WF,1I,5T,VZ,VX,AC,NW,UA,US,
User currently offlinestitch From United States of America, joined Jul 2005, 31243 posts, RR: 85
Reply 24, posted (3 years 11 months 1 week 2 days 19 hours ago) and read 22509 times:
Support Airliners.net - become a First Class Member!

Quoting Asiaflyer (Reply 23):
Which must be one of Boeings major mistakes.
Quoting stitch (Reply 21):
Boeing has always priced the 787-8 near that of the 767-400ER

It was actually one of the cornerstones of the sales campaign - "for the price of a 767, you can have better performance and economics than an A330."


25 MD-90 : Note that the quote prices do not include 1). Engines ($20-$30 million according to the article) 2). Boeing furnished equipment (does anyone know wha
26 KFlyer : The current plan seems to be to get as much customers as possible to convert to the higher premium 787-9. If that's not enough, they will bring on the
27 Post contains images astuteman : I'd agree with that. What we don't know is how much of the supposed $12Bn-$18Bn overrun lies in Boeings court, and how much of the generated revenue
28 Post contains images stitch : I don't believe Boeing has announced the 787 is in a forward-loss position at this time.
29 DocLightning : Boeing is notorious for sitting mum on bad news. We shall see.
30 Garpd : I can just imagine similar problems, discussions, negative feelings and overall pessimism when Boeing was developing the 747. They bet their entire fu
31 slz396 : Surprising? No Ironic? For sure. After all, the mantra of the day has for long been that Airbus were forced to give away planes for free, whereas it
32 slz396 : While there is certainly a lot of innovation to be found onboard the 787, we should also look beyond the PR spin from Boeing and understand that much
33 PlanesNTrains : You've used the "previously unseen" comment before, but there isn't any proof that it is correct. As Stitch noted, typical launch discounts of upward
34 Burkhard : The 787 was a reaction of Boeing towards the unforeseen success of the A332 in those years, which blew the 767 out of the air. This made it clear tha
35 rheinwaldner : But the largest part of the delay can not be attributed to the CFRP design. Thus the know how in CFRP design alone is NOT the key to complete the nex
36 slz396 : Isn't there? Do you know of any other program that sold round 850 frames, costed roughly $15B and yet hasn't broken even? The simple total program co
37 parapente : I do hope that this sad story is not about to repeat itself. Airbus as we know was thrashing around during the time period under discussion.Indeed I t
38 PlanesNTrains : That is not what we are talking about. You are saying that previously unseen discounts were offered, not that heavy discounts were offered to many ca
39 Post contains links N14AZ : Looking back into history I wonder if this is really that frightening. A-net-member VC10DC recently posted this interesting article in that thread ab
40 Garpd : Nor did I infer it did. However, Boeing and its partners had to learn, develop, test and mature a method to make such large CFRP barrels. It is perfe
41 slz396 : Normally, when you compete with a new design like the 787 against a well established product like the A330, you're fighting an uphill battle on price
42 slz396 : May I suggest you read again what exactly was written by me, rather than assume what was written? See it now? Boeing offered previously unseen pricin
43 Post contains links and images Part147 : That makes a lot of sense to me... Ryanair bought cheap and sold these 'nearly' new aircraft for more than they paid for them a few years later!!! Sa
44 Post contains images EPA001 : At the EIS that might be the case which is a very severe problem for several airlines who have ordered the B787. Later on no-doubt it will receive th
45 OyKIE : Jon wrote a very interesting article. Going forward, what will be intersting to follow is how quickly Boeing can regain control on the certification a
46 faro : The 787 (as well as the A380) will unfortunately provide many a business school with rich case studies on how not to manage complex, high-tech program
47 JerseyFlyer : It would be well worth their while to accept them all and sell on at a profit - as Ryanair is said to have done with its 738s!
48 bj87 : With the massive design costs, late fee penalties and future development cost I would say this is Boeing's Concorde. A great piece of engineering but
49 CHRISBA777ER : It cannot possibly be that bad. I just cannot see it. Surely?
50 Burkhard : No, A and B need each other about balanced. The more problems one manufacturer has, the higher the margin of the other, not the market share.
51 slz396 : If you have a backlog of 850 planes and you're still at a loss on such a commercially successful program, then it is really bad indeed, not to mention
52 AA777223 : I'm sorry, but that statement is complete and total bullshit. Assuming all of these round, estimated, armchair CEO numbers that have been bandied abo
53 Klaus : No, Concorde was a positively massive strategic miscalculation regarding the entire business case, primarily of the operating cost (fuel prices) and
54 CHRISBA777ER : Gawd. I went to Seattle a while ago when I thought I was going to see the first flight of what may well be the single most important commercial aviati
55 Post contains images slz396 : That much is a fact. In the USA, the general view of Airbus at that time was close to this: "Airbus have had a too easy time for their money really:
56 Post contains images Klaus : Ouch! Your guess is probably oversimplified, but I would not be surprised if there was some element like that in the management decisions.
57 maxter : Mmmmm how the worm turns, I distinctly recall many posters here said exactly the same about the A380 program and how A should walk away from the whol
58 aerokiwi : Who exactly are you quoting there? If yourself - best not to use quotation marks because really you're just generalising and imprinting your own bias
59 Post contains images travelavnut : You want me to dive in the archives? I can assure you the A380 bashing was on a whole different level...People have such short memories. Indeed!! Whe
60 slz396 : The above is a satirical synopsis of about a million or so posts from Boeing fanboys on this site in the 2004-2008 period, and although one would hop
61 AA777223 : Well, forgive me fellas. I didn't intend to say that Airbus got fair shakes in the deal either. I agree with you both 101%. There were certainly plen
62 maxter : Wholeheartedly agree and am very much looking forward to the day I will fly in each of those aircraft mentioned. Cheers and all the best...
63 travelavnut : No worries mate! Couldnt agree more!
64 Post contains images EPA001 : Sometimes it still is...... I agree as well. They should continue to in the (long) end make a success out of this program. It will take them a lot mo
65 stitch : Why are so many people just assuming Boeing is in forward loss position with the 787? Spite? The Seattle Times article did not state this. The Flight
66 CharlieNoble : If nothing else, the sagas of the A380 and B787 go a long way toward explaining why technical progress seems so "slow" throughout history. The consequ
67 zeke : I do not think that that is the case for the initial 45 aircraft and 20 options. I think I remember reading the first 45 aircraft were purchased with
68 DocLightning : Not when 70+% of customers cancel their orders. At that point, the cost of producing the remaining orders will simply add to the losses. Better to li
69 OyKIE : Flightblogger har released a complete document. It say Boeing targets 10 pr month in 2013 and 17 pr month in 2016!
70 Post contains images EPA001 : Not yet, but she still could do so. Just as the B787 could still do so, but just as with the A380 it will take quite a number of years. Both programs
71 Post contains links astuteman : Indeed they haven't, and I'm not actually saying that they are in a forward loss position - only that I wouldn't be surprised if they were. That said
72 stitch : I have no idea, to be honest. But I would think Boeing would be required to announce they were in a forward loss position for accounting and regulato
73 panais : Might be the issue here that the A380 is a 40 year program, while the B787 might be a 10-20 year program? The A380 is really version 4 (A300, A320, A
74 DocLightning : I honestly doubt that the 787 program can ever be profitable. First of all, the plane is now going to be ~4yr late. Given ~20yr life cycle for a give
75 zeke : I thought in one of the previous delay announcements they just spread the R&D over more years (program accounting ?), so on a year on year on bas
76 JBirdAV8r : Those are just grand and emotional assumptions based on, at best, nebulous data. First of all, a quick elementary math check reveals that 4/20=1/5=20
77 Post contains links and images keesje : Those are my thoughts after the equally worrying SeattleTimes article on production issues this week (topic got deleted). We've had this discussion b
78 DocLightning : Explain to me quantitatively how that is the case. If each aircraft now costs 3-4x to build what Boeing originally predicted, and their initial profi
79 LAXDESI : The development cost overruns are a sunk cost, and are not relevant to decisions Boeing has to make on 787 program going forward. Boeing's market val
80 stitch : I expect the 787 will run longer than 10-20 years. The airframes themselves should be good for a very long time. Also, Airbus is hoping that they wil
81 SchorschNG : Can Boeing actually cancel particular orders? I mean do they have the option to cancel the original contract? If I understand correctly, basically eac
82 Post contains images EPA001 : Which is an amount of which we can not be sure. But the number could also be higher in the end since we just do not know everything, especially event
83 LAXDESI : All of that is accounting window dressing. Markets are always focused on cash flow and not accounting numbers, and have already recognised these cost
84 pygmalion : The day the 787-8 goes EIS is when the life cycle starts not in 2006. (of course that ignores the fact you are again fudging your dates. Original EIS
85 stitch : To my knowledge, only QF have publicly stated they can "walk away" from their 787 contract with "no penalties", which likely means that QF would have
86 PW100 : I'm pretty sure that this is a small lapse in Jon's extensive report. BFE usually is associated with Buyer Furnished Equipment. Meaning that all thos
87 Post contains images EPA001 : Please don't get me wrong Stitch, I agree with you on your last post (and usually many more out here ). On a technicality only, before the Euro becam
88 manfredj : Highlights what nicely? Your twisted view of Boeing managment? Your acting a bit childish Doc, and highlighting your "achievments" in predicting the
89 astuteman : Personally I can only doubt that it will ever be anything but profitable I'd tend to agree, although as the section I quoted earlier shows, I guess t
90 Glom : Large backlog, large compensation liability. It makes me think of the bread episode of The Apprentice from this year. The doctor guy patted himself on
91 JBirdAV8r : OK, as simply as I can... First of all, the 10% profit margin per airframe is your own unofficial number. And a 12 billion dollar overrun in total de
92 LAXDESI : Thanks for the analysis. If the numbers you post are correct, then Boeing can expect to have incremental cash flow of nearly $10 billion on the 800 a
93 JBirdAV8r : Exactly, and that's all that really matters in the end, anyway!
94 Klaus : Very funny. Do you really claim that you've completely missed all the discussions of the A380 around here? You could only come to such an unrealistic
95 WingedMigrator : That's because you only joined a.net in 2007. Had you been around a few years before that, in the dark times of the A380 program, you might find this
96 Post contains images aerokiwi : Right so not a quote at all then - just a "satirical synopsis" You mean, a gross generalisation. Oh but I thought break-even mattered not? No more? I
97 manfredj : No, I've remember them and I took part in them. My argument about the 380 was primarily about the demand for such a large aircraft and the number of
98 DocLightning : From the sound of things, cancellation, once unthinkable, is now a very remote possibility. At present, the costs are sunk. But that doesn't mean tha
99 Post contains links and images keesje : Not entirely http://www.eads.com/dms/eads/int/en/...010/Roadshow%2520November2010.pdf, page 16.
100 DocLightning : Apparently they predict 2014-2016. Not bad. Then again, neither were their overruns as compared to this. They never had, say, an in-flight fire with
101 stitch : I'm very skeptical that the 787's costs have doubled and are now somewhere north of $20 billion in total across all suppliers. I'm sure they have gone
102 WingedMigrator : You two seem to misunderstand the meaning of 'profit' in this context. The EADS document states that they will start making money on each frame deliv
103 A380900 : I think there is a big difference between the A380 and the 787 even though the results may be quite similar (profitability much further into the futur
104 474218 : First of all the 10% profit-margin is a pipe dream! Actual profits for airframe sales run in the 2 to 4% range. If you need proof just look at any OE
105 manfredj : Absolutely splendid assessment of Airbus and Boeing's position in the market today and some of the best writing I have seen in these forums in a long
106 stitch : No argument that Boeing "threw the ball too far" and Boeing certainly had to respond to the A330 family. However, I think Boeing and Airbus are more
107 Post contains images Ferpe : To discuss something a bit different, it takes B quite some time to come out with the present delay (didn't say final, though I really hope this is th
108 JBirdAV8r : That's ridiculous. That may be what fanboys and overzealous PR departments (and characters like John Leahy) do, but companies with such successful an
109 Post contains images astuteman : The initial budget was never $5Bn. No way on Earth. If you include the cost of WIP, and penalty charges, on top of huge rework, and extensive ongoing
110 JBirdAV8r : That number was just Boeing's reported (initial) share in the development costs. Since major portions of the 787 were not developed in-house, the lio
111 Post contains images astuteman : That's how I see it too The interesting unknown is how the cost of the overruns falls...... I'm sure that will be one tangled web. Rgds
112 tdscanuck : Not really...the 787 was always considerably cheaper than the 767 (relative to capacity), and those early orders were made many years ago. Pile norma
113 astuteman : To be honest, I wasn't. I considered that to part and parcel of the consequences of selling the airframe... Hence my use of the wording "being recove
114 peanuts : I think what some of us forget on here is long term thinking. In spite of disaster scenarios unfolding currently for Boeing, and for Airbus in the rec
115 SchorschNG : "All composite" is rubbish anyways, because there still is quite a lot of metal in the primary structure. The composite thing works, we just don't kn
116 keesje : I wonder how much the risk sharing partners also share in the positive cash flows and benefits. Nothing's for nothing (except some subsidies / tax cu
117 parapente : It does amuse me how often these threads quickly break down to tiny matematical details when none of us have nearly enough information to do so.It is
118 OyKIE : I still believe that Boeing will follow this path. The real question is timing the eventual Y1 and Y3 service entry.
119 Post contains links and images mrocktor : This is where you pull out a 5 year old thread and see who got it right PS: Boeing is much, much larger than just BCA. They have the money to pay for
120 parapente : I still believe that Boeing will follow this path. The real question is timing the eventual Y1 and Y3 service entry. Sorry too late - they have not.Y3
121 MD-90 : I think it boils down to too many MBAs at BCA and not enough sense.
122 CharlieNoble : I agree with your first point regarding these mathematical analyses based on incomplete information. An interesting exercise but not particularly use
123 airfrnt : s/787/380/g s/european/russian/g New thread, same as the old thread. Only the nationalities and the airplane name changes.
124 tdscanuck : Define "quite a lot". Yes, there are major metal components (landing gear, wing ribs I think, some bulkheads). But it's certainly true that the vast
125 aerodog : And Tom, you're forgetting warranty claims subtract from all of this.
126 Post contains links keesje : Regardless of the numbers circulating (did some notice the $45 Billion total program cost floating around? http://www.google.nl/search?q=787+dr...red
127 Post contains links wolbo : The Boeing Co. will resume testing its 787 "very soon," according to a company executive. http://www.bizjournals.com/albuquerq...-resume-787-test-flig
128 Post contains links wolbo : http://atwonline.com/aircraft-engine...777-200lr-787-delay-continues-1222
129 Post contains images JBirdAV8r : I'd imagine there will be some attorneys involved in unraveling that one. That doesn't count, that's a theoretical opportunity cost, and any monetary
130 parapente : Re reply 124. Quoting parapente (Reply 117): 1.Try and sell a "slow concorde". Displacing zero understanding of the market. At the time they offered i
131 JBirdAV8r : For the rusty of memory: April 2001 "We obviously see a use for that airplane," said Donald J. Carty, CEO of American Airlines parent AMR Corp., Boei
132 parapente : One event does not kill a 30-40 year concept.The concept (speed over efficiency) was faulty.The market spoke.9/11 was along time ago - on that basis i
133 justloveplanes : I still believe there was one major design assumption that has had a very significant cascading effect relating to the performance of the 787 and tha
134 manfredj : I'm confused, can you elaborate on that a bit? I think your argument is that the plastic airplane is trivial and besides that, there are no real leap
135 CFBFrame : Can you name one that's been profitable with less frames? There was something I was going to say about this comment, but is it really worth it? I'll
136 JBirdAV8r : 9/11 wasn't a small event. It had both immediate and long-term implications for the airline industry. It was a "perfect storm" that killed the Sonic
137 CharlieNoble : You're really having a great day, aren't you? The sad truth is that you've added nothing of value to this discussion other than make sweeping proclam
138 CFBFrame : I thought this was discussed before, so is Jon doing an apples to apples comparison, or is he doing an apples to grapefruit? So how do you really fee
139 JBirdAV8r : Design changes after initial production are kind of outside the scope of my very simplistic model. I think some people are assuming I'm making that m
140 CFBFrame : No it's not, Boeing bought all the bad suppliers!!! Those that wanted to play but were unable to deliver will see their portion of the program brough
141 CFBFrame : Number 4 is scheduled to leave KPAE in 40 or so minutes. Also, production No. 2 had its engines running yesterday. No info on when No1 leaves, but pla
142 LAXDESI : Markets have already discounted these interest payments to the present. In other words, some of the sunk cost may be sitting on Boeing's books as loa
143 manfredj : In the auto industry, we call it a "write down." Reduce the profit of all your inventory by spreading (losses) across the whole board. There was a gr
144 CharlieNoble : LOL, well it's not the Jonestown kool-aid being passed around here I can tell you that brotha! Seriously though, very glad to hear that flight testin
145 JBirdAV8r : Hey CFB-- I give Boeing credit for pushing the envelope! I think the level of ambition in some of their initial forecasts showed some, to quote the g
146 DocLightning : This isn't a nascent program with some early growing pains. This is a 17yo with two criminal convictions, a meth problem, and a straight-F school rec
147 CharlieNoble : LOL. I think the 787 is probably more like a kid who has been testing poorly in school and getting picked last in gym class. Then you come to find ou
148 474218 : From Boeing 2009 annual report: total operating margin (profit) 3.1%. They did much better in 2008 at 6.5% but like I said 10% is a pipe dream, somet
149 tdscanuck : No, it burned *the same* fuel for a 10% decrease in flight time. The 787 is just the Sonic Cruiser flipped around...Sonic Cruiser was same fuel, 10%
150 Aesma : I thought ETOPS for the operators was mainly linked to the history of the operators, meaning if you're already operating ETOPS planes then you're cle
151 manfredj : If I recall, the 747 had the same ailments....only difference is, Boeing is a lot more experienced in dealing with them. Additionally, 787 hasn't alm
152 CFBFrame : I checked your bio and I thought so, so please don't get into the weeds!!! But based on your comments, you seem willing to cast that kid off and no o
153 JBirdAV8r : OK, here we go again. Tdscanuck already pointed out the flaw in your numbers. Besides, it wasn't absurd. It ended up being misconfigured for long-ter
154 Post contains images flyorski : Can we *please* drop that analogy? I think its getting really tiresome. Arguing about "what age of a kid the program would be" seems really low. Disc
155 DocLightning : OK, I think we need to discuss our benchmarks because we're both correct. The SC burned 20% more than the 787. It was comparable to the aircraft of t
156 tdscanuck : It depends a lot on the regulator, but it's not automatic that you have ETOPS on a new type just because you've got it on other types. Especially on
157 JBirdAV8r : I've never heard that. Source? Not true by a long shot. CV880/990 were faster, as was the VC-10, possibly others. And the 727 had an Mmo of around .9
158 Post contains images BMI727 : It was Boeing that slowed it down. Pan Am actually wanted the wing sweep to be 40 degrees for a higher cruise speed but Boeing preferred 35 in the in
159 parapente : What would I do now? Well like every other person outside Boeing - we don't know any of the key facts upon which to make a decision.From the article F
160 Post contains images CharlieNoble : Concur on the -8i, but since the freighter is basically done (and will have no competition at the top end) I'd say continue with it. Couldn't hurt. F
161 flyglobal : Thanks Armchair CEO parapente giving your thoughts ! You know that the other armchair CEO next in the row of A'net armchair rows at Boeing (and we ar
162 tdscanuck : Absolutely. I don't think there has been any point in the 787 program since the rollout where cancellation would be more cost-effective. Even with ma
163 Ferpe : I must object to several posts in this thread that advocates that Bs management can not be made 100% responsible for the present situation. (As writte
164 art : I think you ae spot on there. Er... fuselage? It is difficult to see any way in which Boeing could have seriously believed there would not be a delay
165 parapente : Happy Christmas one and all! Interesting comments above. Lets hope for a year when things go more smoothly for all manufacturers of both aircraft and
166 abba : But you have forgotten the cost of capital. Time is money you know! As time goes by interest of the money that you have invested must be added no mat
167 stitch : I don't believe they managed them much at all, hence the second part of that sentence:
168 Post contains images multimark : An interesting point. I also wonder how many airline CEOs regret pushing Airbus away from the original A350 concept now. PS Allan Mulally must wake u
169 Post contains images stitch : While Mullaly did keep Ford out of Chapter 11 bankruptcy reorganization, he did so by mortgaging every asset the company had. This means every vehicl
170 Post contains links and images Ferpe : After poking around I found the answer to my question about what management had taken the decisions on the 787, the whole story is here: http://www.se
171 Aesma : About the subcontractors, Boeing overestimated their abilities, but also didn't listen to them, because some said they couldn't deliver in the timefra
172 parapente : Re 380900's point and other related comments.I know for sure one individual in the industry who is very concerned on just this point. I think 2011 wil
173 astuteman : Canning the 748 would be ludicrous having spent all the money, and being within a whisker or recovering revenue.... Correct The 777W/L was the primar
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
The Price Of Success - Dublin Airport posted Fri Sep 22 2000 07:58:01 by Kaitak
Can We Trust The Word Of Boeing Or Airbus? posted Sat Feb 27 2010 15:19:32 by Navion
What Is The Status Of Boeing 707 VN-A394? posted Mon Mar 2 2009 15:24:31 by Fanofjets
Do Fuel Prices Really Affect The Price Of Tickets? posted Fri May 2 2008 21:37:11 by Aruba
The Future Of Boeing's Fleet? posted Sat Jul 14 2007 13:52:41 by Dsa
Year Of Boeing Widebody Sales Milestones. posted Thu Mar 22 2007 16:12:08 by Ikramerica
What Kinds of Factors Affect The Price Of Airline Tickets? posted Mon Feb 26 2007 06:22:49 by LAXspotter
Photo Of Boeing 787 Section Being Transported posted Sat Oct 28 2006 16:09:01 by RobK
What If The Price Of Oil Continues To Rise? posted Mon Jul 17 2006 20:29:22 by FLY2LIM
We're Sorry, The Price Of This Flight Has Changed posted Wed Mar 8 2006 04:54:52 by AMSMAN