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Todays 787 Cost 185m$ To Build  
User currently offlineferpe From France, joined Nov 2010, 2792 posts, RR: 59
Posted (2 years 8 months 2 days 22 hours ago) and read 13060 times:

The 787 will get it's certification now and start revenue service, this is great and I hope no more gremlins appear after EIS. It's an elegant design and deserves a long an healthy life.   


That being said here is a Bloomberg article spelling out a number of interesting facts about the economics of the plane as it stand now.

http://www.bloomberg.com/news/2011-0...llion-cloud-over-faa-approval.html



Seems the early birds cost 300m$ apiece to build and the present ones in FAL about 185m$. If ANA at all got them for 50m$ they should now be laughing all the way to the bank after biting nails for 3 years    .

[Edited 2011-08-24 06:15:43]


Non French in France
12 replies: All unread, jump to last
 
User currently offlinetdscanuck From Canada, joined Jan 2006, 12709 posts, RR: 80
Reply 1, posted (2 years 8 months 2 days 22 hours ago) and read 12961 times:

Quoting ferpe (Thread starter):
I hope no more gremlins appear after EIS.

I guarantee there will be gremlins after EIS. The A320 and 737 have been out for decades and they still issue service bulletins pretty regularly.

Tom.


User currently offlinelightsaber From United States of America, joined Jan 2005, 12443 posts, RR: 100
Reply 2, posted (2 years 8 months 2 days 21 hours ago) and read 12712 times:
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Quoting tdscanuck (Reply 1):
I guarantee there will be gremlins after EIS.

More than a few of my friends wouldn't have jobs if there were no gremlins.  

They feel secure.   

Lightsaber



I've posted how many times?!?
User currently offlineBaroque From Australia, joined Apr 2006, 15380 posts, RR: 59
Reply 3, posted (2 years 8 months 2 days 21 hours ago) and read 12570 times:

Quoting ferpe (Thread starter):
Seems the early birds cost 300m$ apiece to build and the present ones in FAL about 185m$.

Ouch. Does this suggest that if, as and when the A350 gets this far (or a bit further) one of the major competing aspects will be build cost?

What was the original build cost projection? Surely not is all I can think!


User currently offline474218 From United States of America, joined Oct 2005, 6340 posts, RR: 9
Reply 4, posted (2 years 8 months 2 days 21 hours ago) and read 12488 times:

Quoting ferpe (Thread starter):
If ANA at all got them for 50m$ they should now be laughing all the way to the bank after biting nails for 3 years.


This is no different than any other aircraft. Its called a learning curve. It may take 300,000 man hours to build the first examples off the production line. Once the production is under way that figure will be cut in half or more. So the first airframes off the production line are always sold at a loss.


User currently offlineBurkhard From Germany, joined Nov 2006, 4361 posts, RR: 2
Reply 5, posted (2 years 8 months 2 days 21 hours ago) and read 12488 times:

Quoting ferpe (Thread starter):
If ANA at all got them for 50m$ they should now be laughing all the way to the bank after biting nails for 3 years

Bigger probelm is that most of the almost 1000 early orders were sold at a price around 100 Mio (149 list price, minus 30% usual) - which means that Boeing has to reduce costs to build them a lot or has to throw 85 BIO into it...


User currently offlineLAXtoATL From United States of America, joined Oct 2009, 1590 posts, RR: 2
Reply 6, posted (2 years 8 months 2 days 21 hours ago) and read 12401 times:

Quoting Burkhard (Reply 5):
Bigger probelm is that most of the almost 1000 early orders were sold at a price around 100 Mio (149 list price, minus 30% usual) - which means that Boeing has to reduce costs to build them a lot or has to throw 85 BIO into it...

Not to mention the additional compensation Boeing had to give because of the delays. The 787 will in all likely hood be a huge success for the airlines operating them, but it appears that it will be a very very long time before Boeing will see any resemblance of a profit off of this aircraft. They really need to get ahead of that learning curve and both lower their costs and increase production. Where does the second line is SC stand?


User currently offlineferpe From France, joined Nov 2010, 2792 posts, RR: 59
Reply 7, posted (2 years 8 months 2 days 19 hours ago) and read 11854 times:

Quoting tdscanuck (Reply 1):
I guarantee there will be gremlins after EIS.

I mean big stuff like the power panel fire, lets hope such stuff does not appear.

Quoting 474218 (Reply 4):
This is no different than any other aircraft. Its called a learning curve. It may take 300,000 man hours to build the first examples off the production line. Once the production is under way that figure will be cut in half or more. So the first airframes off the production line are always sold at a loss.

The article says that the first 1000 will cost an average of 116m$, as to Burkhard they were sold for something in that order, gross margin is not to great    .

But then A has similar problems with their latest product, as said shared problems are always better then lone ones       .



Non French in France
User currently offlinefleabyte From Brazil, joined Jan 2010, 84 posts, RR: 0
Reply 8, posted (2 years 8 months 2 days 18 hours ago) and read 11559 times:

some smart and patient airlines are making good fleet renewal economics - ANA, JAL, LAN, Emirates, AirAsia - now they will be able to sell their NEo spots at big profit if they like. Getting 787, A330, A380 and 767 at below manufacturing cost sometimes.

User currently offlineStitch From United States of America, joined Jul 2005, 29694 posts, RR: 84
Reply 9, posted (2 years 8 months 2 days 18 hours ago) and read 11299 times:
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At launch, the 7E7-8 had an average list price of USD120 million. I have heard one source claim NH received a 50% launch discount due to the size of their order. So if true, they paid about USD60 million per 787-8.

By 2005, that average list price (now for the 787-8) rose to USD146 million.

I have multiple data points that claim the average discount for the 787-8 in 2005 was 25%. Now before you call "baloney", note that Boeing was offering a 777-class airplane for a 767-class list price in an attempt to reduce the average discounting rate (which at the time for a widebody was around 35%). Also note that airlines really wanted this plane, in part because of the numbers Boeing was claiming and in part because the list price was USD30 million below the A330-200's.

So figure the average price paid for the 235 orders secured in 2005 was USD110 million.

By 2007, list price for the 787-8 was USD162 million and the average discount was now 35% for an average sale price of $105 million for the next 500 frames.




As for compensation payments, Macquarie Equities Research analyst Robert Stallard claimed that the total compensation Boeing had paid out by the end of 2009 was just over $5 billion, averaging $6 million per airframe. NH, JL, LA, FM and HY all accepted 767-300ERs in lieu of cash payments, which helps explains the flush of orders for the model.  

QF received just under USD300 million in compensation through 2009 (though they subsequently cancelled some of their order) and AI agreed to USD500 million earlier this year after demanding USD1 billion.


User currently offlineContnlEliteCMH From United States of America, joined Mar 2005, 1450 posts, RR: 44
Reply 10, posted (2 years 8 months 2 days 17 hours ago) and read 11241 times:

Quoting 474218 (Reply 4):
This is no different than any other aircraft. Its called a learning curve.

I hope that everybody reading this thread understands that the term "learning curve" is not nebulous; it means something very specific, and is heavily figured into the projected ROI of a project. The following link provides an example of a learning curve:

http://www.ifm.eng.cam.ac.uk/csp/summaries/learningcurve.html

I realize that the basic math in the link is probably beyond most A.netter's capabilities, so it can be boiled down to this: The cost of producting an airframe today is not static and will drop with each successive unit produced.

There has already been speculation that Boeing's learning curve for 787 is grossly overestimated. http://www.zimbio.com/Boeing+787+Dre...eliver+5+6+787s+2011+787+9+EIS+set An error in which the learning curve percentage is higher than planned further dilutes ROI, or in A.Net-speak, increases the number of frames required to hit breakeven.



Christianity. Islam. Hinduism. Anthropogenic Global Warming. All are matters of faith!
User currently offlineSEPilot From United States of America, joined Dec 2006, 6683 posts, RR: 46
Reply 11, posted (2 years 8 months 2 days 17 hours ago) and read 10818 times:

Any new aircraft is going to cost more (a lot more) to build in the early stages of production than later models will. Ironically, the early planes are also the least desirable because improvements are continuous, and the most improvement often comes early in a plane's life. So even if the early planes were sold for $50 million, they will not really be a bargain. Once 787's become common the first birds will become highly undesirable, just like early 777's are. The most notable, and most important, comment in the article was that the 787 has the potential to become Boeing's most profitable plane ever. That, in spite of all of the early problems, is the most important fact. The 707 did not make any money until long, long after its introduction (but it vaulted Boeing into the lead in the airliner world, a position it held until the late 90's); the 747 nearly bankrupted Boeing, and the 737 came within a whisker of being canceled in the late 70's. But each of these has ended up making piles of money for Boeing, and I expect the 787 will as well. Designing and building large airliners is the highest stakes poker game existing (at least in private enterprise.) You have to have guts and a strong stomach, as well as the will to persevere in order to engage. It is not coincidence that their are only two players left.


The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
User currently offlinebikerthai From United States of America, joined Apr 2010, 2012 posts, RR: 4
Reply 12, posted (2 years 8 months 2 days 16 hours ago) and read 10426 times:

Also, don't forget that the price of an airplane is only a portion of the business model for both A and B.

They may or may not make a profit with the airframe itself, but they will make money from all the supporting contracts, including overpriced spares, training, etc . . . that comes with any purchase.

bikerthai



Intelligent seeks knowledge. Enlightened seeks wisdom.
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