BoomBoom
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How Boeing Can Sell The 787 So Cheap

Tue Dec 20, 2005 6:48 am

A good article in MarketWatch explains why the 787 breaks with Boeing's past:
http://www.marketwatch.com/news/stor...A7F-BC6D-40AD0EB90557}&siteid=mktw

"Boeing was less aggressive on new materials in aircraft than Airbus, and now Boeing is more aggressive,"

Another advantage of composites: Boeing expects to get more for its money.

For every five to six pounds of aluminum it buys, only one pound of that may end up being built into the plane's body, according to Bair.

"Composites are just the opposite," he said. "You probably get 90% of the material flying away because it's an additive process."

John Greenlee, Continental Airlines' director of fleet planning, said that the 787's fuel efficiency is a "huge attraction" but it's more than that.

"They've tried to make a true comprehensive design from the start," he said. That includes looking at how configuring planes helps or hurts their residual values and how much maintenance will be needed by using composite materials.

Greenlee adds that the plane's simplified choice of interiors and ability to quickly swap engines make it easier to sell it to another airline, giving it a higher value in the end.

Boeing is also borrowing another page from the Airbus playbook by giving more work to contractors.

In the wake of a machinists strike that halted production on Boeing's commercial aircraft line this year, some analysts say the 787 is going to change labor-management relations at the company.

"This was a huge issue when they were making those outsourcing decisions," said Richard Aboulafia, vice president of analysis at Teal Group, an aerospace consulting firm based in Fairfax, Va.

The arrival of the Dreamliner means that Boeing's commercial airplane suppliers, which now number about 1,200, are going through big changes in how they work with the aerospace giant not just today, but in the future.

It can use fewer workers on the production line and tie up less capital during the plane's development when its suppliers take on bigger roles with engineering and manufacturing.

Clay Jones, chief executive officer of Rockwell Collin said research and development spending on the 787 is about the same as its work on the 777, 747-400, 757 and 767. Staying on budget, however, is far easier because Rockwell Collins has more control over the production plan, both saving time and money.

The company has bundled together fly-by-wire flight control systems, surveillance and communications systems and displays on the flight deck, effectively taking on more work than it otherwise would.

Boeing's defense-contracts division is positioning itself so that it can supervise ever bigger contracts where it has more authority over subcontractors while carrying out less of the actual work itself.

A similar trend is at work with the 787, Aboulafia said.

"Manufacturing is not a big part of the profit model. Maintenance, finance, support ... the service aspect is."
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keesje
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 8:11 am

Quoting BoomBoom (Thread starter):
A similar trend is at work with the 787, Aboulafia said.

"Manufacturing is not a big part of the profit model. Maintenance, finance, support ... the service aspect is."

Especially financing. Just saw a press release The US government is financing some EK 777-300ER´s via its Export-Import Bank, that "supports the financing of U.S. goods and services, maintaining, and creating more U.S. jobs..."

Air Canada ok, but Emirate$..

http://today.reuters.com/investing/f..._0_AIRLINES-EMIRATES-FINANCING.XML
"Never mistake motion for action." Ernest Hemingway
 
flyinghippo
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 8:16 am

Quoting Keesje (Reply 1):
Especially financing. Just saw a press release The US government is financing some EK 777-300ER´s via its Export-Import Bank, that "supports the financing of U.S. goods and services, maintaining, and creating more U.S. jobs..."

Air Canada ok, but Emirate$..

Eh... How does EK financing with a US bank or government helps to cut down the cost of 787?? EK is borrowing money to pay Boeing, but it doesn't help Boeing to reduce it's manufacturing costs...

Or, as always, you like to imply otherwise with some of your posts but just say what you're really trying to say?
 
zvezda
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 8:18 am

The reason why the B787 costs less to manufacture is that the production method is more automated and requires much less labor.
 
AJRfromSYR
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 8:24 am

How does financing through anyone but Boeing help Boeing?
-AJR-
 
n1786b
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 8:43 am

You seriously can't believe that Airbus doesn't use the same thing, now can you?

I was expecting you to complain about all those hidden Boeing subsidies....

http://www.exim.gov/about/reports/compet/competpart201.pdf

Just what do Export Credit Guarantee Department (ECGD), France’s COFACE, Spain’s CESCE, and Germany’s Hermes do all day long?

And it looks like your pal Noel isn't happy when the European taxpayers don't subsidize Airbus sales:

THE Airbus chief executive Noel Forgeard has accused Britain’s Export Credit Guarantee Department (ECGD) of “totally losing sight of its duties” by failing to support commercial aircraft sales.

http://business.timesonline.co.uk/article/0,,9067-1184324,00.html

And why is the Director of COFACE a EADS Board member?

http://www.eads.net/web/lang/en/1024...F00000000400004/6/03/31000036.html

And Q3 2005, Airbus was able to get $436million of credits from COFACE FRANCE for the delivery of 26 planes:

1 A340-600, 3 A330-300, 4 A330-200, 1 A321-231, 1 A321-200, 11 A320-200,
1 A319-111, 3 A319-100,1. A319-CJ
To the following:

Thaï Airways, China Southern, China Airlines,
China Eastern, Eva Airways, Austrian, Bouillioun, Asiana, Debis, KLM, Azal, Cebu Air
http://www.coface.fr/dmt/_docs/gc3-05.pdf

Go ahead and check every Quarter here on this site - Airbus is there - it even has its own section at the end of each document. And you have to wonder why the French are financing AB NBs Made in Germany.

http://www.coface.fr/dmt/rubg_act/indexg.htm

- n1786b
 
bigb
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 8:45 am

Quoting Keesje (Reply 1):
Especially financing. Just saw a press release The US government is financing some EK 777-300ER´s via its Export-Import Bank, that "supports the financing of U.S. goods and services, maintaining, and creating more U.S. jobs..."

Air Canada ok, but Emirate$..

http://today.reuters.com/investing/f...G.XML

Your point is .....
ETSN Baber, USN
 
APFPilot1985
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 8:49 am

I work with Aluminum fabrication and machining and I can attest that it sucks to work with and its very wasteful
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PHXinterrupted
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 9:04 am

Quoting Keesje (Reply 1):
Especially financing. Just saw a press release The US government is financing some EK 777-300ER´s via its Export-Import Bank, that "supports the financing of U.S. goods and services, maintaining, and creating more U.S. jobs..."

Air Canada ok, but Emirate$..

http://today.reuters.com/investing/f...G.XML

It's only $265 million. BTW, Europe does the same thing for Airbus.
Keepin' it real.
 
AJRfromSYR
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 9:14 am

It's not free money...
-AJR-
 
N79969
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 9:43 am

The 787 is not only an entirely new airplane but represents a very new way of building them....Boeing made a big leap.
 
ikramerica
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 9:43 am

Quoting APFPilot1985 (Reply 7):
I work with Aluminum fabrication and machining and I can attest that it sucks to work with and its very wasteful

Do you take the remainder and resource it in any way? Melt it and sell it as scrap?

Too sharp and not absorbent enough to use as cat sand...
Of all the things to worry about... the Wookie has no pants.
 
APFPilot1985
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 9:46 am

Quoting Ikramerica (Reply 13):
Do you take the remainder and resource it in any way? Melt it and sell it as scrap?

Too sharp and not absorbent enough to use as cat sand...

Yeah we sell it as scrap but at a very very discounted rate....And you arent kidding about sharp, my hands can attest to that.
Stand Up and Be Counted Visit Site Related to Voice your opinion
 
Aither
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 9:48 am

Quoting N1786b (Reply 5):

And Q3 2005, Airbus was able to get $436million of credits from COFACE FRANCE for the delivery of 26 planes

U should not talk about things you obvisouly don't know much about.

Anyway what sources : Continental, Aboulafia,...

[Edited 2005-12-22 01:49:13]
Never trust the obvious
 
zvezda
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 9:49 am

Quoting Ikramerica (Reply 13):
Too sharp and not absorbent enough to use as cat sand...

... depends on how much one likes cats.  Smile
 
dl021
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 10:34 am

Exim Bank has been financing large purchases for our trading partners in more areas than just aviation products for over 70 years. They are not some US effort to lend some perceived advantage to Boeing over Airbus, its simply a tool that every exporting nation uses to facilitate growth in exports for our nation.
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elvis777
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 10:48 am

Aither,

I am willing to listen to you. But I need more info. Can you tell me why you claim that he does not know what he is talking about? You obviously do not agree with him so you must have a source that directly discredits this information. Can you please post them

Thank you.

Peace

Elvis777
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n1786b
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 5:01 pm

Quoting Elvis777 (Reply 18):
I am willing to listen to you. But I need more info. Can you tell me why you claim that he does not know what he is talking about? You obviously do not agree with him so you must have a source that directly discredits this information. Can you please post them

Yeah, let's see your sources.

I must say EADS.NET, TIMES.CO.UK and COFACE.FR are pretty good sources for my claims that Airbus also gets export financing from European ExIm Banks.

- n1786b
 
qutaiba
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 5:19 pm

Questions:

1. with the Fed bank increasing the discount rate, how is that affetcing the aircraft finance & lease market?

2. does Exim provide lower interest rates? or is it the better government to government financing option? (EK is government owned).
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kaneporta1
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 6:04 pm

It may be a lot more wasteful to use aluminum, but it's A LOT cheaper to buy and A LOT easier to assemble. Marketwatch may claim there is so much waste and how composite materials are built up, but they fail to comment on how much more expensive it is to build them up. And don't even get me started on assembly and being within all the specified tolerances, it will be way more difficult and time consuming.
I'd rather die peacefully in my sleep, like my grandfather, not terrified and screaming, like his passengers
 
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garpd
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 6:14 pm

Quoting Kaneporta1 (Reply 19):
It may be a lot more wasteful to use aluminum, but it's A LOT cheaper to buy and A LOT easier to assemble. Marketwatch may claim there is so much waste and how composite materials are built up, but they fail to comment on how much more expensive it is to build them up. And don't even get me started on assembly and being within all the specified tolerances, it will be way more difficult and time consuming.

And sadly you fail to realise that Boeing has spent the last few years developing ways to make the process much cheaper. It would seem they have succeeded, otherwise the whole 787 idea would be useless and too expensive to launch
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kaneporta1
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 6:37 pm

Quoting GARPD (Reply 20):
And sadly you fail to realise that Boeing has spent the last few years developing ways to make the process much cheaper. It would seem they have succeeded, otherwise the whole 787 idea would be useless and too expensive to launch

Do you actually know any details about 'the process'??? The fact that Boeing managed to reduce costs doesn't mean that composite manufacturing is anywhere as cheap as aluminum. What YOU fail to realize is that the last year or so the 787 has got a few more metal parts instead of composites because of ease of manufacturing and ability to meet all aerodynamic tolerances. I don't have a source for this online, it's inside information. You also fail to realize that a cheaper composite manufacturing process doesn't mean a cheaper airplane by itself. There are many other cutting edge technologies and assembly line optimizations used to build the 787 that bring the price down.
I'd rather die peacefully in my sleep, like my grandfather, not terrified and screaming, like his passengers
 
jush
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 6:41 pm

I certainly would love to be in one of these talks about a possible order.
With both of them airbus and boeing just to see what they really tell you about the aircraft. With these figures we really could compare the planes here.
We're always just dead guessing.

Regds
jush
There is one problem with airbus. Though their products are engineering marvels they lack passion, completely.
 
Joni
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 6:48 pm

Here is another take on the low 787 price tag, from EADS:

Such a negotiation should also address the short-term issue of the two competing new aircraft, the Airbus A350 and the Boeing 787. This latter has become the world�s most subsidised airliner ever. Boeing has amassed more than US$ 5 billion in government subsidies to pay for its development and production, through US and foreign govern- ment R&D funds, tax relief schemes and launch aid. New subsidies are being added every day. But for these subsidies, Boeing could not have launched the 787, which is currently being dumped on the market at unprecedented low prices.

http://www.eads.net/web/lang/en/800/...F00000000400004/1/48/40707481.html
 
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garpd
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RE: How Boeing Can Sell The 787 So Cheap

Thu Dec 22, 2005 6:52 pm

Quoting Kaneporta1 (Reply 21):
Do you actually know any details about 'the process'??? The fact that Boeing managed to reduce costs doesn't mean that composite manufacturing is anywhere as cheap as aluminum. What YOU fail to realize is that the last year or so the 787 has got a few more metal parts instead of composites because of ease of manufacturing and ability to meet all aerodynamic tolerances. I don't have a source for this online, it's inside information. You also fail to realize that a cheaper composite manufacturing process doesn't mean a cheaper airplane by itself. There are many other cutting edge technologies and assembly line optimizations used to build the 787 that bring the price down.

I didn't say a cheaper process = a cheaper built plane. Nor did I say there were no metal parts added.

My point was, you made it sound like composites are fantastically expensive to produce and are not the best choice. I challenged you by stating that boeing have found ways to make it cheaper. Not cheaper than metal, or cheaper than anythign for that matter. Just more cost effect than what you seem to be suggesting.
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BoomBoom
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RE: How Boeing Can Sell The 787 So Cheap

Fri Dec 23, 2005 12:07 am

Quoting Joni (Reply 23):
Here is another take on the low 787 price tag, from EADS:

Such a negotiation should also address the short-term issue of the two competing new aircraft, the Airbus A350 and the Boeing 787. This latter has become the worlds most subsidised airliner ever.

The best defense is good offense. What would you expect Airbus to say?

The fact is that every subsidy Airbus alleges Boeing gets, Airbus also gets. But in addition Airbus gets "launch aid" which they don't have to pay back if the program isn't profitable (A380?).

"We will give Airbus the means to win the battle against Boeing," former French prime minister Lionel Jospin once said. It couldn't be any more clear than that.
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N328KF
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RE: How Boeing Can Sell The 787 So Cheap

Fri Dec 23, 2005 12:13 am

Quoting BoomBoom (Reply 25):
"We will give Airbus the means to win the battle against Boeing," former French prime minister Lionel Jospin once said. It couldn't be any more clear than that.

If I were Boeing's management group, I would put that on banners around every Boeing facility, and make sure it gets recounted at press events.
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daedaeg
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RE: How Boeing Can Sell The 787 So Cheap

Fri Dec 23, 2005 12:49 am

Quoting N328KF (Reply 26):
"We will give Airbus the means to win the battle against Boeing," former French prime minister Lionel Jospin once said. It couldn't be any more clear than that.

Could you imagine the uproar if Vice President Cheney stated that the US will give Boeing the means to win the battle against Airbus?
Everyday you're alive is a good day.
 
Areopagus
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RE: How Boeing Can Sell The 787 So Cheap

Fri Dec 23, 2005 7:13 am

Quoting Joni (Reply 23):
Here is another take on the low 787 price tag, from EADS:

Thank you, Joni! I knew we could count on you.
 
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garpd
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RE: How Boeing Can Sell The 787 So Cheap

Sat Dec 24, 2005 5:55 am

Quoting Joni (Reply 23):
Here is another take on the low 787 price tag, from EADS:

Such a negotiation should also address the short-term issue of the two competing new aircraft, the Airbus A350 and the Boeing 787. This latter has become the world�s most subsidised airliner ever. Boeing has amassed more than US$ 5 billion in government subsidies to pay for its development and production, through US and foreign govern- ment R&D funds, tax relief schemes and launch aid. New subsidies are being added every day. But for these subsidies, Boeing could not have launched the 787, which is currently being dumped on the market at unprecedented low prices.

http://www.eads.net/web/lang/en/800/....html

EADS are hardly going to pat Boeing on the back for a job well done are they?
Of course they'll spin everything exactly like in paragraph above. Everything they mention, they get themselves.

The 787 may well be the "most subsidised airliner ever" but Airbus are the most subsidised airliner manufacturer ever.

 Yeah sure
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